How Olympus boosts Vodafone India’s margins

Gaining a foothold in India’s booming telecoms market could prove highly lucrative for companies that make the breakthrough. The Telecom Regulatory Authority of India estimates that the number of mobile phone subscribers will reach one billion by March 2014 – a huge target market for businesses that establish themselves in India.

Given the industry’s rapid rise, it is little wonder that companies have installed thousands of telecom towers across the nation to capitalize on growing demand for mobile network coverage. But the bad news for the providers is that some of the masts are putting a strain on their finances.

When working with Ernst & Young on other projects, Vodafone was keen to evaluate the cost and financial reward for the more than 100,000 towers and telecom sites they had built in India. The discovery was recently made using Ernst & Young’s Olympus Solution Suite (Olympus), which analyzes the performance of phone masts and telecoms networks throughout India. The solution electronically monitors all telecoms towers, revealing which make a profit and highlighting those that lose money. Reasons and drivers for non-profitable ones are then identified and targeted action plans are drawn up.

The full article examines the challenges behind creating a system that would enable Vodafone India’s management to assess the operational costs and revenues of all its Indian telecoms sites. Before using Olympus, the company was gathering this data from many disparate sources, making it difficult to keep track of every financial and customer usage report. The idea behind Olympus was to build an automated solution that retrieved all information on a monthly basis and collated intelligence around metrics.

Since implementing Olympus, Vodafone India’s operation has significantly improved. According to the company, the system is expected to boost its earnings before interest, taxes, depreciation and amortization (EBITDA) this year.

The management can now monitor the costs and revenues of all the company’s Indian telecoms networks, identify underperforming assets and carry out improvements to make them more productive. The system has also given the company access to more information, such as customer usage data.

Given its success in India, Vodafone is considering rolling out the solution to its operating companies across the world.

This project is being keenly watched in India at Vodafone and could be a game-changer in profitability improvement initiatives for the telecom sector.

The complete article was written by:

  • Satyen Makhija
    Senior Manager, Advisory Services, Ernst & Young, India

Read the full case studypdf532.91 kB

EY refers to one or more of the member firms of Ernst & Young Global Limited (EYG), a UK private company limited by guarantee. EYG is the principal governance entity of the global EY organization and does not provide any service to clients. Services are provided by EYG member firms. Each of EYG and its member firms is a separate legal entity and has no liability for another such entity's acts or omissions. Certain content on this site may have been prepared by one or more EYG member firms