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Wind Mobile

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Wireless!Communication!Industry!in!Canada! Meizhang!Xing!(1000583889)!
! Executive!Summary!
Hello!Mr.!Liu,!
I!am!honered!that!you!trust!my!ability!enough!to!give!me!this!opportunity.!After!my!detailed!research!and!analysis,!I!do!feel!that!it!is! indeed!worthwhile!to!learn!about!the!wireless!communication!industry!as!well!as!WIND!Mobile.!I!will!presnet!you!with!my!findings! from!the!following!three!aspects!:!! 1. 2. 3. Current!industry!environment!:!rapid!growth!;!oligopolistic!structure! Wireless!communication!industry’s!strong!profit!generation!ability!:!revenue!growth!;!EBITDA!margin!growth! WIND!Mobile’s!development!and!potentiality:!stable!corporate!structure;!competitiveness!

!

!

In!my!opinion,!the!above!three!question!needs!to!be!answered!to!make!an!informed!decision!about!the!investment.!I!do!hope!my! research!can!help!you!convince!your!partners!to!investigate!in!the!Canadian!wireless!industry!and!WIND,!and!eventually!decide!on! whether!or!not!to!invest!in!WIND.!

1.!Current!Industry!Enviroment!
a.!Rapid!development:!! !! ! ! !
Cell!phone!penetraeon:! In!2013,!83%!of!Canadian! households!had!an!aceve!cell!phone,! up!from!78%!in!2010.! In!2013,!21%!of!households!reported! using!a!cell!phone!exclusively,!up! from!13%!in!2010.! Data!traffic:!! Mobile!data!traffic!will!grow!900%! from!2013!to!2018,!a!compounded! annumal!growth!rate!of!54%.! Employment:!! Telecommunicaeon!field! employment!would!grow!from! 64,100!people!today!to!110,000!by! 2019!ability.!!

(http://cwta.ca/facts_figures/)!

From!the!evidents!above,!we!can!see!that!cell!phone!penetration!is!getting!deeper!every!year,!data!traffic!is!increasing!by!more!than! 50%!each!year,!and!industry!employment!will!double!in!merely!5!years.!Backed!up!by!the!statistics!above,!we!can!safely!arrive!to!the! conclusion!that!wireless!communication!industry!is!experiencing!rapid!expansion,!which,!with!careful!management,!will!result!in! considerable!financial!gains!for!investors.!The!Canadian!wireless!industry!is!worthy!of!!investors’!time!and!effort.!! ! b.!Industry!participants! ! There!are!currently!more!than!two!dozen!wireless!service!providers!in!Canada,!including!national!carriers!and!their!subsidiaries,! regional!carriers,!urban_centric!providers,!and!numerous!high_profile!resellers:!Bell,!Bell!Aliant,!Chatr!Wireless,!Cityfone,! CityWest,!EastLink,!Fido,!Ice!Wireless,!KMTS!Mobility,!Koodo!Mobile,!Lynx!Mobility,!MTS,!Mobilicity,!NorthernTel,!PC!Mobile,! Petro!Canada!Mobility,!Primus,!Public!Mobile,!Rogers!Wireless,!SaskTel,!Sears!Connect,!7_Eleven!Speak!Out!Wireless,!Sogetel,! TBayTel,!Telebec,!TELUS,!Videotron,!Virgin!Mobile,!Wightman!Telecom!and!Wind!Mobile.!!!!!!!!!!!!!!!!!!!!!!!!!!!(http://cwta.ca/facts_figures/)!

! c.!Industry!giants! ! Bell!Canada,!MTS!Inc.,!Rogers,!Shaw,!and!TELUS!are!Canada’s!five!largest!providers!of!telecommunications!services.!Combined,! including!their!affiliates,!they!accounted!for!more!than!90%!of!total!market!revenues.!!

!

These!charts!on!the!right!show!the!percentage!of! wireless!service!revenue!market!shares!in!2012!and! 2013!for!Canada’s!three!major!telecommunications! service!providers:!the!Bell!Group,!Rogers! Communications,!and!Telus!Communications! Company.!Altoghether,!Bell,!Rogers,!and!Telus!had! more!than!90%!of!wireless!sector!revenue!in!2012! and!2013.!Moreover,!according!to!the!same!source,! these!three!companies!also!had!more!than!90%!of! the!wireless!subscribers!in!2012!and!2013.!! Among!the!category!“other”,!new!market!entrants,! including!WIND!Mobile,!occupied!3%!of!the!market! shares;!the!other!5%!belongs!to!smaller!companies.!

Other! 8%! Bell! 28%! Telus! 28%! 2012!

Other! 8%! Bell! 28%! Telus! 29%! 2013!

Roger s! 36%!

Roger s! 35%!

!

!

It!can!be!seen!that!the!Canadian!Wireless!communication!industry!has!an!oligopolistic!structure,!with!the!major!players! capturing!more!than!90%!of!the!market!share,!the!other!8%!being!new!entrants!and!smaller!players.!This!oligopoly!resulted!in! the!high!pricing!and!low!customer!service!standard!of!the!wireless!services.!Canadian!consumers!are!generically!unsatisfied!by! the!price!and!quality!of!their!wireless!supplier.!It!is!the!industry!trend!that!a!new!robust!supplier!can!enter!the!industry,!inject! competition!and!improve!the!quality!of!the!products.!!!
(http://www.crtc.gc.ca/eng/publications/reports/PolicyMonitoring/2014/cmr5.htm#s5d)!!

!

2.!Wireless!Communication!Companies’!Profit!Generation!Ability!
a.!Annual!growth!of!revenue!of!the!whole!industry! Years& Revenue&(billion)& ! 2009& 16.9! 2010& 18.0! 2011& 19.1! 2012& 20.4! 2013& 21.2! ! !

The!industry!is!seeing!a!steady!increase!in!revenue!in!the!past!five!years.!It!has! increased!from!the!16.9!billion!dollars!in!2009,!to!21.2!billion!dollars!in!2013.! Within!the!period!of!2009!to!2012,!there!has!been!an!approximately!6.5%! annual!growth.!However,!this!trend!surprisingly!stopped!in!the!year!2013.!They! growth!has!not!come!to!a!complete!stop,!but!the!growth!rate!has!seen!a! substantial!decrease!to!being!merely!3.78%.!The!decrease!in!the!growth!rate! cannot!be!determined!without!further!research.!But,!as!long!as!the!growth!rate! remains!positive,!investors!will!be!receiving!a!profit.!

Wireless!Industry!Revenue! (billion)! 21.2! 19.1! 20.4! 16.9! 18!

2009! 2010! 2011! 2012! 2013!

b.!Steady!EBITDA!margin!over!the!years! Years& 2009& EBITDA&Margin&& 42.0%! ! 2010& 41.5%! 2011& 42.9%! 2012& 40.7%! 2013& 43.2%! ! !

Wireless!Industry!EBITDA!Margin! 42.90%! 42.00%! 41.50%! 40.70%! 43.20%!

EBITDA!is!net!income!before!interest,!taxes,!depreciation,!and!amortization! added!back!to!it.!It!can!be!used!to!analyze!and!compare!profitability!between! companies!and!industries!because!it!eliminates!the!effects!of!financing!and! accounting!decisions;!and!EBITDA!margin!is!EBITDA!divided!by!total!revenue.!! We!can!see!that!the!wireless!communication!industry!has!seen!some! fluctuation!in!EBITDA!margin,!but!it!is!not!dramatic.!In!the!past!5!years,!the! EBITDA!margin!has!remained!slightly!over!40%,!which!is!considerably!higher! than!many!other!industries!as!I!will!present!to!you!in!the!next!section.!!

!

2009! 2010! 2011! 2012! 2013!

c.!Stronger!profit!generation!ability!compared!to!other!industries! ! I!have!found!a!table!published!by!New!York!University!of!the!profit!margin!of!96!industries!in!the!world.!The!table!is!not!specific! for!the!Canadian!market!place,!but!it!gives!us!a!good!idea!of!the!average!profit!generation!ability!of!every!industry!in!the!world.!!

!

I!have!found!only!four!industries!matching!the!EBITDA!margin!of!the!Canadian!wireless! communication!industry.!Among!these!four!sectors,!Canada!is!actively!involved!in!Oil!and! Gas!industry!and!Water!industry.!Canada!has!rich!oil!reserves,!but!they!are!extremely!hard! to!extract.!Water!industry!is!heavily!regulated!and!equity!trading!is!extremely!limited.! Wireless!communication!industry!is!an!inevitable!step!of!technological!advancement.!It!has! nearly!no!risk!and!near!zero!marginal!cost!once!the!facilities!are!installed.!The!fact!that!it!is! such!a!lucrative!and!nonirisky!industry!should!make!it!all!the!more!attractive!to!insightful! investors.!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Industry& Oil!&!Gas! (Production!&! Exploration)& Precious!Metals& Tobacco& Utility!(Water)&

EBITDA! Margin& 42.09%! 42.36%! 41.50%! 42.50%!

!

(http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/margin.html)!

3.!WIND!Mobile’s!Development!and!Potentiality!!
a.!Stable!corporate!structure!and!bright!future:!! ! ! ! On!September!16 !2014,!WIND!Mobile!announced!a!$285!million!buyout!of!the!majority!of!the!stake!held!by!VimpelCom!Ltd.,! which!ended!WIND!Mobile’s!to!ownership!controversies!since!it!was!largely!finance!by!foreign!debt!and!equity.& This!action!will!finally!lead!to!corporate!stability!after!years!of!ownership!uncertainty.!What’s!more,!this!buyout!is!likely!to!result! in!a!partnership!between!the!Ontarioibased!carrier!and!Videotron!to!build!a!national!fourth!wireless!player.!! The!founder!and!former!CEO!of!WIND,!Anthony!Lacavera,!named!his!successor,!Pietro!Cordova.!The!buyout!as!well!as!the! change!of!CEO!blessed!WIND!with!a!fresh!start!and!a!bright!future.! th b.!Recent!year!growth!and!profit!generation!ability.! ! ! ! ! ! ! Year& 2011& 2012& 2013& 2014& Number&of& Subscriber& 317,000! 457,000! 620,000! 741,000! Growth&rate&of& Subscribers& +223,000! +140,000! +163,000! +141,000!

30.00%! 20.00%! 10.00%! 0.00%! 2009! 2010! 2011! 2012! 2013! 2014!

Telecom!Industry! Net!Income! Margin! WIND!Net! Income!Margin!

The!first!graph!on!the!left!shows!that!WIND!has!an! average!annual!growth!in!number!of!subscribers!of!approximately!150,000.!According!to!the!annual!statement!of!Bell,!Rogers,! and!Telus,!they!had!only!an!average!increase!of!100,000!subscribers!per!year.!! The!graph!on!the!right!shows!the!net!income!margin!of!both!the!telecom!industry!and!WIND.!The!slight!decline!in!the!net! income!of!the!whole!industry!presents!little!problem!to!investors!because!it!is!affected!by!financing!and!accounting!decisionsiiii EBITDA!is!a!better!measure!for!profitability.!However,!operating!under!the!same!tax!treatment,!WIND!still!presented!a!higher,! and!increasing!net!income!margin!compared!to!the!whole!industry.!It!can!be!concluded!that!WIND!possesses!momentum!and! potential!of!expansion.!!
!(Industry!data!acquire!from!Capital!IQ!in!Rotman!finance!lab!and!http://www.thewirereport.ca/)!

!

!

Conclusion:!
The!Canadian!wireless!communication!industry!is!experiencing!an!explosion!of!demand.!The!industry!has!a!near!zero!marginal!cost! and!is!extremely!lucrative.!It!is!operating!under!an!oligopoly!structure,!but!new!entrants,!like!WIND,!and!are!likely!to!inject! competition!into!the!industry,!changing!the!industry!into!a!competitive!structure.! The!best!feature!about!investing!in!the!wireless!communication!industry!is!that!it!has!almost!no!risk.!The!demand!will!continue!to! increase!for!at!least!another!5!years!as!data!usage!increasingly!becomes!a!necessity!of!people’s!daily!life,!and!the!industry!operate!at! near!zero!marginal!cost.!WIND,!as!a!promising!new!entrant!of!the!industry!has!proven!itself!to!be!sustainable!and!competitive.!Thus,! I!strongly!believe,!an!insightful!investor!should!keep!a!watchful!eye!on!the!wireless!communication!industry!and!WIND!Mobile.!By! closely!monitoring!the!industry,!smart!investment!could!result!in!significant!profit.!!

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...treasure hunt?” Lion agreed and joined Peter. The forest was dense and dark. Peter was afraid but with Lion by his side, he made it through. When the two finally reached the mountain they met Eagle. “You have excellent vision and can alert us to dangers,” said Peter to Eagle. “Will you come with us? We’re looking for a treasure.” Eagle agreed and joined Peter and Lion. The mountains were tall and craggy. Lion slipped but Peter was swift enough to give him a hand and pull him up. Eagle with his sharp vision watched every step they took. Soon, they reached the valley below where they met Sheep. “Will you join us in our search for treasure?” Peter asked Sheep, “and keep us warm when it’s cold?” Sheep agreed and joined Peter, Lion and Eagle. A cold wind swept across the endless meadow. They all huddled against Sheep who kept them warm and cozy. The four finally reached the desert where they met Camel. " You are called the ship of the desert,” said Peter to Camel, “will you help us get across and join the treasure hunt too?” Camel agreed. All exclaimed in surprise. Peter, Lion and Sheep mounted the camel and happily set off across the vast desert with Eagle enjoying the spectacle from above. Camel began galloping and everybody cheered with excitement. Traversing the desert on Camel’s back was quite thrilling! The five finally reached the ocean where they met Turtle. “Can you help us cross the water?” Peter asked Turtle. “We are on a treasure hunt.” Turtle agreed and joined Peter, Lion, Eagle...

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What Are the Key Aspects in the Construction and Design of the Burj Dubai Tower?

...comfortable lies in its structural design to deal with the main problems such as the wind load, the physical strength of the building and of course the elevator design needed for such a large structure. The Burj Dubai, situated in Dubai, will soon be the tallest building in the world, bypassing the previous record holder, the Taipei 101 by almost 290 metres giving it an astonishing 800 metre height. With over 2700 feet, designing and constructing such a vast building has given significant challenges to engineers and designers alike. Since the building can hold up to 35,000 people at once, it is essential that it is strong, comfortable and able to move people up and down it at a steady rate. This essay will explore how the designers and engineers went about solving these issues. One of the key problems the engineers had to overcome was effect of the wind load and how it would affect the building motions due to the extraordinary height of the tower. Wind load is something that must be taken into account for all buildings, but obviously the wind velocity increases the higher you go and since the structure is over 800 metres tall, there is guaranteed to be a large wind force acting on the building. Three different engineering firms: Skidmore, Owings and Merrill who were all working on the project, hired the RWDI (Rowan Williams Davies & Irwin Inc.) a wind and environmental engineering firm to conduct wind studies on the Burj Dubai’s design. The RWDI had worked on a number of previous...

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