1. Business models, strategyegy and internationalisation around the Telecom Crash What is the influence of these strategic choices on the performance of telecom operator companies in the years 1998-2001 H.Ebbers, Nyenrode University and CEIBS Shanghai

2. Agenda Introduction Earlier work about KPN Theory/ choices Research methods Results Conclusions

3. Introduction Work in progress Three students between May 2002 and February 2003 Guidance of the Center for International Business, Nyenrode University

4. Mobile telecommunication IP and data services Internet, call centre and media- services Fixed network Emphasis is on the first three activities Core Activities for KPN

5. Two strategically important joint ventures: KPN Orange (1998) and BellSouth-KPN (1999)……… Acquisition of E- plus (Germany) …seen as a growth market Acquisition of Orange-KPN Belgium Majority stakes in Central and Eastern Europe KPN Mobile

6. Arrangements with NTT- DoCoMo –Technology sharing –Minority holding: NTT- DoCoMo aquired a 15% stake in KPN –UMTS biddings

7. International expansion Regional focus (CEE) Control over management Divestments driven by debt problems and the 2001 telecomcrash

8. KPN’s alliance network within mobile telecommunications

10. Introduction Companies: Telecom Operators –SBC- KPN- France Telecom –Deutsche Telekom - Telia - Sonera –Vodafone - BT - AT&T –Colt - Cable & Wireless - Infonet –Sprint - MCI Worldcom - QWest

11. Theory Business Models –Mintzberg –Cushway & Lodge –Viscio & Pasternack Internationalisation Strategies –Boston Consulting Group matrix –Porter’s generic strategies –Ansoff’s product/market matrix –Equity and non equity based cooperative agreements

12. Business Models

13. Internationalisation  more than 90% of revenue local: level 1  less than 90% but more than 50% of revenue local: level 2  less than 50% of revenue local but less than 25% of revenue  outside its own continent: level 3  more than 25% but less than 50% of revenue outside its own continent: level 4  more than 50% of revenue outside its own continent: level 5

14. Strategies BCG Porter Ansoff

15. Research methods detailed company analyses –performanceperformance –business modelsbusiness models –internationalisationinternationalisation –strategiesstrategies

16. Results: Telecom Crash Market performance

17. Results: Business Models (1)

18. Results: Business Models (2)

19. Results: Internationalisation

20. Results: Strategies

21. Results: Performance

22. Conclusions (1) Generally a limited correlation between company performance and business models, internationalisation and strategy Telecom Crash has little impact on business models, internationalisation and strategy Low debt/equity ratio has positive impact on performance both before and after the Telecom Crash

23. Conclusions (2) Business Models Lack of significant correlation –Customer oriented (Cushway & Lodge) –High Viscio & Pasternack Score Internationalisation Little correlation in 1998, no correlation in other years Strategy Porter: correlation changes before & after crash BCG: stars are performing well Ansoff: move towards penetration after crash