Thursday, October 13, 2011

ROI of YTLP 4G - Just my 2 cents.

My thoughts on YY's comments:

I prefer not to be too optimistic, though the management sounds prudent.

Let's be realistic in 4G investment. How many yrs do you think is feasible for it's ROI?

So far, YTLP has invested $280mil. How much still required? We don't know. Let's assume another $280mil for future expansion. That would total : $560mil.

1st, since there is no benchmark for it's profitability, let's use DIGI as ref, 22% net profit. (I bet you dont want to use G.Packet, right?)

2nd Q: How much is the charges? Competition is getting stronger. I would give an average of $100 per subscription. Fair?

3rd Q: What is Malaysia population? --> 28mil. Assuming 5 pax per family, that give you 5.6mil family in WHOLE MALAYSIA.

4th Q: How wide is YES coverage? P1 has been putting millions and yet to cover the whole nation. How far can YES go with $560mil? Assuming 50%, fair?

5th Q: In that 50% coverage area, how much market share can YES gained? Again, 50%, fair? (i think this is very high already!)

6th Q: What is the % of subscription? From statistic, currently the whole nation still below 40% of subscription to broandband. Again, let's assume it will grow to 70% soon. Good enuf?

OK, then let's do the calculation on ROI:

Estimated Net Profit = RM100 x 5.6mil x 50% x 50% x 70% x 22% = RM21.56mil

ROI? = RM21.56/RM560 = 3.85%!

How much does it contribute to YTLP group earning? = RM21.56/RM1201 = 1.8%!!!

Don't forget, all the above assumption has been made relatively OPTIMISTIC!

Is 4G going to be a good biz to YTLP? I doubt.