Business Development Metrics

Legacy financial models diverge from current reality and future KPIs

Traditionally, mobile operators have been judged based on ARPU, churn and cost per gross addition. Fixed operators, including cablecos, have been judged on uptake of broadband, and upsell to premium video packages. All are being measured on bundled offerings, in both penetration of the base and scope of the bundle.
All of these are flawed to some degree, and investors will need to re-think the models they use to measure the performance of operators, for four reasons:

• Firstly, the imperative for operators is to move towards a more “horizontal” structure. These metrics only relate to the retail icing on the platform and pipe cake.
• Secondly, users aren’t behaving themselves any more. They’re juggling multiple SIMs, handsets and accounts to create their own “unbundles” to meet their personal needs.
• Thirdly, these metrics are irrelevant to emerging two-sided business models that seek to make money from upstream partners for services like advert insertion and payment processing.
• Nobody believes the numbers the operators publish anyway.

In 2008, investors will start to demand new and better metrics.

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