gina wp 4.2 business and exploitation plan may 3 rd 2011 gnss for innovative road applications

GINA WP 4.2Business and Exploitation PlanMay 3rd 2011

GNSS for INnovative Road Applications

GNSS for Innovative road Applications

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Content

• Introduction & Business model definition

• Addressable market and market potential

• General Cost Structure

• Business Case Scenarios

• Business Segment stand-alone scenario

• Business + Private Segments scenario

03/05/2011GINA D4.4 – Business and exploitation plan


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European Commission Push for interoperability and EETS

The European Council and Parliament are developing a strategy for interoperability by establishing the European Electronic Tolling Service (EETS) and supporting pan-

European research projects (i.e. CESARE, RCI) involving major stakeholders

• Interoperability Directive 52/ EC (2004)

• Commission Decision 750/CE (2009)

• CESARE I-IV

• RCI (Road Charging Interoperability)

• GNSS - Satellite positioning (Preferred)

• DSRC - 5.8 GHz microwave technology

• One OBU – One Contract for all EETS Road domains

• Non-discriminatory EETS Provider access to all EETS domains

• No additional toll

• Complementary to actual electronic toll services

• No physical barriers

• Separation of roles between Toll Chargers and Service Providers

Main References

Technologies

EETSKey Elements

Timetable• Mid-2012 for >3,5 tons vehicles (i.e. Trucks, Buses, etc.)

• Mid 2014 for other vehicles (i.e. Cars, Light Commercial Vehicles, etc.)



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Pan-European supporting projects - Cesare IV Framework

Within CESARE project a basic EETS framework has been modelled and the roles of the four main actors (Toll Chargers, EETS Service Provider, EETS Service Users

and Interoperability Management) have been defined

InteroperabilityManagement

- Settlement of disputes- Governance- Establishment and

operation of certification procedures

EETSService Users

- Road user fees payment (via the EETS Provider)

- EETS Service fees payment

EETSService Provider

- Toll payment guarantee- Invoicing (on behalf of

Toll Chargers)- EETS contracts Issuing- OBU Issuing

Toll Chargers

- Transport services provisioning

- Infrastructure maintenance and upgrade



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GINA EETS Business Model – Service vs Economic Flows

EGNOS/GALILEO OPERATING COMPANY

EETS PAN-EUROPEAN SERVICE PROVIDER

OPERATING COMPANY

GNSS SERVICE PROVIDER

Guaranteed service

END USER/CUSTOMER(Private + Business)

Servicebundle

Service fee

Fee per bundle

TOLL CHARGER1, 2…N

CONTENTPROVIDER

TELCO

% Fee on toll collected

Toll Collected

Payment for usage

Payment for usage

INFRASTRUCURE OWNER

PUBLIC INSTITUTIONS

Service/product flows

Economic flows

Fee per Add-on

Add-onService

TollCollected

The EETS Service Provider has a key role as it is the link between all the players along the Value Chain and it is involved in all economic and service exchanges



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GINA Offer structure

ConsumerBusiness

BasicPackage

Add-On

H WS

erv

ice

s• Smart OBU without GUI• Smart OBU without GUI

• Wireless GUI• Wireless GUI

• EFC• E-CALL

• EFC• E-CALL• Fleet Management/ Basic

• Fleet Management/Tracking and Tracing

• Theft management• Traffic info system• Navigation services/ active re-routing

H WS

erv

ices

• GINA Service Provider offer has been structured as:- a set of services offered in a bundle solution to maximize service usage and market penetration- a set of add-on services that can be purchased separately

• Two customer segments have been identified: business (i.e. commercial vehicles) and consumer (i.e. passenger cars)


• Theft management• Traffic info system• Navigation services/ active re-routing


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Content









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Addressable end-user market

• For the addressable end-user market the Business Case has analysed the last available data relevant to the European market of cars, buses, light commercial vehicles, light, medium and heavy trucks, using CAGR of the last 4 years to project data

• The analysis took into consideration all the countries belonging to EU27.



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0

100

200

€300M

2010

244

2011

249

2012

251

2013

253

2014

255

2015

258

2016

260

2017

262

2018

265

2019

267

2020

270

2021

272

2022

275

2023

278

2024

281

2025

283

2026

286

2027

289

2028

292

2029

295

2030

298

Forecast for circulating cars in Europe (2010-2030)

• EU 27 cars market expected to increase from 244 Mln in the 2010 to 298 Mln in the 2030 with a CAGR around 1%

• Relative weight of the first 7 countries (Germany, Italy, France, GB, Spain, Poland, Netherlands) out of the total EU market is almost constant around 75%



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0

10

20

30

40

€50M

2010

36

2011

37

2012

37

2013

38

2014

38

2015

38

2016

39

2017

39

2018

40

2019

40

2020

41

2021

41

2022

42

2023

42

2024

43

2025

44

2026

45

2027

46

2028

47

2029

48

2030

48

Forecast for circulating LCV, Trucks and Buses in Europe (2010-2030)

• EU 27 commercial vehicles and trucks market expected to increase from 36 Mln in the 2010 to 48 Mln in the 2030 with a CAGR around 1,5%

• Relative weight of the first 7 countries (Germany, Italy, France, GB, Spain, Poland, Netherlands) out of the total EU market is almost constant around 70%



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Actual European toll collection market

Source: ASECAP National Reports

0

20

40

60

80

100%

% of total

revenue (2009 )

European toll

revenue

Central-

Southern

Europe

Others

€22,5B

Central-Southern

Europe

Germany

Italy

France

Portugal

Austria

Spain

€20,3B

• European toll collection market is ~€23B and Western European account for over 90% of the total collection

• Despite that, road pricing schemes are expected to spread rapidly all around EU due to:

- Growing mobility needs- Inability of many government to finance additional road infrastructure- Increasing concerns over the environmental impact of road transport- Need for a better and more efficient use of existing infrastructure



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0

5

10

15

20

25

30

€35B

2010

23

2011

24

2012

24

2013

26

2014

27

2015

28

2016

28

2017

28

2018

29

2019

29

2020

29

2021

31

2022

31

2023

31

2024

31

2025

32

2026

32

2027

32

2028

32

2029

32

2030

33

European toll collection forecast(2010-2030)• Annual toll collection revenues have been projected along the Business Case according to

actual road charging scheme trends and upcoming projects

• All EU27 countries RUC scheme where analysed in depth in order to take into account all country peculiarities

Source: ASECAP National Reports, Toll Road News, Euromonitor, GINA project analysis



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European Electronic Toll Collection (ETC) products and services market

Source: GIA Report, Company Annual Reports, IBTTA, ASECAP

0

500

1.000

€1.500M

Auto

stra

de

205

T-Sy

stem

s

177

Kaps

ch

152

Telven

t

96

Efko

n

67

Siem

ens

67

Euro

toll

66

Indr

a

65

Egis

54

Q-FRE

E

43

GEA

38

SICE

34

Cofir

oute

31

CS

28

Asco

m

27

Tecs

idel

10

Sirit

1

Other

239

Tota

l

239

514

648

1,401

Companies with operations in many geosAnnual ETC revenue (2008)

European Electronic Tolling products and services market is ~€1.4B and highly fragmented



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Prominent European ETC vendors

AlcatelIN Autostrade 260 Italy Ascom 35 France Bouygues France Capita UK Cofiroute 60 Germany, France, US CS 41 France Efkon 100 Several Egis 107 Several Eurotoll 85 France, Spain GEA 60 Primarily France GMV Spain IBM Sweden Kapsch 250 Several Peek Traffic BV Eastern Europe Q-FREE 80 Norway Sanef France Serco UK SICE 60 Spain, S. Africa Siemens AG 120 Several T-Systems 230 Germany Tecsidel 23 Spain Telvent 250 Several Thales France, UK Indra 120 Spain, Latin America

VendorEst. ETC global

revenue ($M)Main location

Lane Maint.

HardwareBack Office



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0,0

1,0

2,0

3,0

€4,0B

2010

0,42

2011

0,43

2012

0,45

2013

1,14

2014

1,22

2015

1,32

2016

1,74

2017

1,83

2018

1,93

2019

2,01

2020

2,09

2021

2,17

2022

2,26

2023

2,35

2024

2,44

2025

2,54

2026

2,64

2027

2,75

2028

2,86

2029

2,97

2030

3,09

Urban Road Charging fee collection estimation (2010-2030)

Introduction of Urban

Road Charging

Scheme in all cities

above 1M inhabitants

Growth of actual

Urban Road Charging Scheme

Progressive Introduction of

Urban Road Charging Scheme in the remaining TOP 50 European

cities

Perpetuity Growth

• Urban Charging fee collection revenues of EU-27 Top-50* cities have been estimated starting from the ones of currently in place UC scheme (i.e. London, Milan, Stockholm) and adjusting them proportionally to population

*EU-27 Top-50 cities have been selected according to population and traffic index (Tom Tom data)

EU-27 Top-50cities URCCollection



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Content









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GINA Telecommunication costs- Main assumptions

*General public offers scaled down starting from offers with data allowance as close as possible to the defined communication range (100- 500 MB/month)

Telco Requirements

Costs

FutureTrends

• Telco costs stable along the BP time horizon: cost would not be decrease significantly, rather than maximum data cap would increase rapidly

Roaming

• The communication channel among the OBUs and the Central IT Infrastructure will be done by GPRS/UMTS: RUC data reports will be sent daily to optimizes bandwidth and server usage

• The communication requirement range for the basic package have been assumed around 100 MB/month for both the consumer and the business segment

• International roaming costs declining along the BP time horizon from 5 to 3 times the cost of national services

• Average roaming percentage weight:- Consumer segment: 10%- Business segment: 20%

• Communication prices per country, based on currently offered mobile broadband services*, with a 40% discount achievable thanks to proper negotiation and business agreements

• Further 40% discount for private segment versus business segment



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European mobile broadband services prices

COUNTRY> OPERATOR NAME OF PLAN100 MB

€/MONTHAUSTRIA T-MOBILE FAIRCLICK BASIC 3,0BELGIUM MOBISTAR INTERNET EVERYWHERE MAX 1,5

CZECH REP. T-MOBILE INTERNET BASIC 1,0

FRANCEBOUYGUES TELECOM FORFAIT PC INTERNET MOBILE 4,5

SFR FORFAIT AJUSTABLE 4,9

GERMANYT-MOBILE WEB'N'WALK CONNECT M 8,4

VODAFONE D2 MOBILE CONNECT VOLUME L 6,7O2 MOBILE DATENTARIFE INTERNET PACK 5,0

GREECE PANAFON (VODAFONE) VODAFONE MOBILE BROADBAND VMC250 6,0HUNGARY VODAFONE VODAFONE INTERNET 1G 1,3IRELAND VODAFONE IRELAND VODAFONE MOBILE BROADBAND 1,5

ITALY VODAFONE OMNITEL MOBILE BROADBAND 2,5

NETHERLANDS

T-MOBILE MOBIEL BREEDBAND BUSINESS 3,5VODAFONE LIBERETEL DATA-ABONNEMENTEN NATIONAAL PLUS 4,0

POLANDCENTERTEL (ORANGE) ORANGE FREE STANDARD 1,8POLKOMTEL/PLUS GSM IPLUS PRYWATNIE 60 1,8

PORTUGALTMN (TELEMOVEL) BANDA LARGA LIGHT 2,2

OPTIMUS KANGURU BASIC 2,2

SLOVAK REP.ORANGE SLOVENSKO MOBILNÝ ORANGE INTERNET 1,2T-MOBILE SLOVAKIA RÝCHLY INTERNET 2 1,2

SPAIN

AMENA/ORANGE TARIFA INTERNET EVERYWHERE 2,9

TELEFONICA MOVILES TARIFA PLANA INTERNET 3,5

VODAFONE ESPANA TARIFA NAVEGA MINI 2,2SWEDEN SVENSKA UMTS-NAT MOBILT BRETBAND MIDI 1,0

UKORANGE MOBILE BROADBAND 1,9

T-MOBILE UK MOBILE BROADBAND 1,9VODAFONE MOBILE BROADBAND 1,9

AVERAGE 2,9

Note: data refers to mobile broadband services via USB modem / PCMI card since any add-ons for voice communications is required

Actual mobile broadband costs vary from 1,0 € to 8,4 € across different EU-27 countries, with an average of 2,9€


BACKUP


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GINA OBU related costs- Main assumptions

0

50

100

150

€200

157

137

122

111

103

97

93

89

87

85

84

8382

8281 81

2015 2017 2019 2021 2023 2025 2027 2029

OBU+Install Cost Evolution(Business Segment)

OBU & Installation

Financing

Assistance

• The OBU purchase cost and all the costs related to installation and assistance would be included in the basic package

• OBU cost for business segment, installation included, assumed to be 160€ in 2015 (starting from 220€ in 2012), declining to 80€ in 2030 following an exp-curve:

- Costs are highly affected by scale economies- Installation costs (actually around 50€/OBU) would be drastically reduced in case of

partnership with vehicles manufacturers

• OBU cost for consumer segment, assumed to be 45€ in 2018 (starting from 90€ in 2012), declining to 30€ in 2030 following an exp-curve; installation costs in this case have not been considered since the OBU has been assumed “plug & play” type, much simpler than the business segment type

• OBU + Install costs assumed to be sustained through a “leasing like” purchasing,- 10% interest rate- 5 years leasing duration, after 5 years the OBU would be completely renewed

• Assistance costs for fixing troubles with OBU assumed to be equal to 30% the annual leasing fee


0

50

100

150

€200

63

54

48

43

40

37

35

34

33

3232

3131 31 30 30

2015 2017 2019 2021 2023 2025 2027 2029

OBU+Install Cost Evolution(Consumer Segment)


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GINA Architecture Overview

Central IT Infrastructure

Vehicles

UsersOBU

Content Provider 1

Content Provider 2

Content Provider 3

Content Provider n

RUC & Service Users(e.g. Motorway Companies, Municipalities, Insurances

companies)

GINA Core IT Infrastructure

Service Center 1

Service Center 2

Service Center 3

Service Center n

GINA EETSService Provider

External Entities

• GINA core IT infrastructure is composed by two main blocks:- the Central IT Infrastructure- the Service Centers

• These tow blocks are the key elements for determining both Capital Expenditure profile and Operating Expenses profile



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GINA Opex & Capexprofile estimation• For both Opex and Capex a stepwise evolution profile has been

assumed, reflecting the progressive penetration in different areas

• According to the defined penetration plan three main phases have been identified:

Phase II

Phase III

Phase I

• Investments and operating costs to support the service provision to the business segment in Area 1 (Central Southern Europe)

• Investments and operating costs to support the service provision to business and private segment in Area 4 (Eastern Europe) and Area 5 (Mediterranean Island) in addition to Area 1

• Investments and operating costs to support the service provision in Area 2 and Area 3 (Benelux & Great Britain) (Northern Europe) in addition to Area 1, Area 4 & Area 5



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GINA Opex & Capex- Main Assumptions

Opex

• Launch on the market for Business segment on 2015

• Architecture upgrades driven by penetration plan

• 1 years prior to each architecture upgrade, 50% of the upgraded architecture on-going costs shall be supported to prepare the go-live

• During the launch year for each phase additional launch costs shall be supported

• Opex reduction for the business segment stand-alone scenario equal to 40% (not applied for core IT infrastructure Phase 1)

Depreciation

On-going investment

Launch/ Upgrades

Investment

• Hardware: 5 years • Software: 3 years• Other material: 5 years• Other not material: 15 years

• 33% of investments have to be supported two years ahead GINA SP launch or architecture upgrades, the remaining 66% one year ahead

• Capex reduction for the business segment stand-alone scenario equal to 30%

• Sustaining/maintenance capex are equal to depreciation

Capex



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0

10

20

30

40

€50M

2014

10

2015

36

2016

21

2017

24

2018

33

2019

27

2020

31

2021

40

2022

34

2023

34

2024

34

2025

34

2026

34

2027

34

2028

34

2029

34

2030

34

2,0 2,3 3,2 3,5 3,9 4,3 4,7 5,0 5,3 5,6 5,8 6,10,0 0,7 1,0 1,5 1,8

# Subscribers

Business ( Mln )

GINA Opex profile (2013-2030)- Business segment stand-alone

Pan-EU systemOn-going

Area 1 - 50%

ongoing costs

Opex distribution

Area 1Launch

+ ongoing costs

Area 1 +Area 4&5

50% On-Going

Area 4&5Launch

Area 2&3Launch

Pan-EU system on-going operating expenses equal to ~34M€


Area 1&4&5 +Area 2&3

50% On-Going

Area 1ongoing

costs

Area 1&4&5on-going

costs


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GINA Opex - Details by Phase Business segment stand-alone


BACKUPPHASE 1: COST ELEMENT MAINTENANCE OPERATIONSOPERATIONSPERSONNELHEADCOUNT

OPERATIONSPERSONNEL

COSTTOTAL

CORE INFRASTRUCTURE -SYSTEM 374.400 362.880 216 12.960.000 13.697.280

CORE INFRASTRUCTURE -APPLICATION 439.056 248.688 116 3.560.000 4.247.744

CORE INFRASTRUCTURE -TOTAL 813.456 611.568 332 16.520.000 17.945.024

SERVICE CENTRES-TOTAL 142.560 32.400 60 2.400.000 2.574.960

TOTAL IT CORE 956.016 643.968 392 18.920.000 20.519.984

ADDITIONAL LAUNCH COSTS (for launch year only) 15.000.000

PHASE 2: COST ELEMENT MAINTENANCE OPERATIONSOPERATIONSPERSONNELHEADCOUNT

OPERATIONSPERSONNEL

COSTTOTAL



CORE INFRASTRUCTURE -TOTAL 1.084.608 815.424 443 22.010.000 23.910.032


TOTAL IT CORE 1.274.688 858.624 525 25.290.000 27.423.312



OPERATIONSPERSONNEL

COSTTOTAL



CORE INFRASTRUCTURE -TOTAL 1.355.760 1.019.280 555 27.590.000 29.965.040


TOTAL IT CORE 1.593.360 1.073.280 654 31.550.000 34.216.640



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0

20

40

60

€80M

2014

10

2015

36

2016

21

2017

33

2018

56

2019

46

2020

51

2021

67

2022

57

2023

57

2024

57

2025

57

2026

57

2027

57

2028

57

2029

57

2030

57

2,0 2,3 3,2 3,5 3,9 4,3 4,7 5,0 5,3 5,6 5,8 6,10,0 0,7 1,0 1,5 1,8

# Subscribers

Business ( Mln )

2,3 2,9 3,8 4,2 4,7 5,1 5,3 5,6 5,8 6,1 6,3 6,50,0 0,0 0,0 0,0 1,8

# Subscribers

Private (Mln )

GINA Opex profile (2013-2030)- Business + Private segments

Pan-EU systemOn-going

Area 1 - 50%

ongoing costs

Opex distribution

Area 1Launch

+ ongoing costs

Area 1 +Area 4&5

50% On-Going

Area 4&5Launch

Area 2&3Launch

Pan-EU system on-going operating expenses equal to ~57M€


Area 1&4&5 +Area 2&3

50% On-Going

Area 1ongoing

costs

Area 1&4&5on-going

costs


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GINA Opex - Details by Phase Business + Private segments


BACKUPPHASE 1: COST ELEMENT MAINTENANCE OPERATIONSOPERATIONSPERSONNELHEADCOUNT

OPERATIONSPERSONNEL

COSTTOTAL



CORE INFRASTRUCTURE -TOTAL 813.456 611.568 332 16.520.000 17.945.024


TOTAL IT CORE 956.016 643.968 392 18.920.000 20.519.984



OPERATIONSPERSONNEL

COSTTOTAL





TOTAL IT CORE 2.124.480 1.431.040 872 42.060.000 45.615.520



OPERATIONSPERSONNEL

COSTTOTAL

CORE INFRASTRUCTURE -SYSTEM 1.040.000 1.008.000 599 35.940.000 37.988.000

CORE INFRASTRUCTURE -APPLICATION 1.219.600 690.800 326 10.010.000 11.920.400



TOTAL IT CORE 2.655.600 1.788.800 1.091 52.590.000 57.034.400



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GINA Capex profile (2013-2030) –Business segment stand-alone

0

20

40

€60M

2013

26

2014

52

2015

18

2016

31

2017

44

2018

26

2019

39

2020

52

2021

34

2022

34

2023

34

2024

34

2025

34

2026

34

2027

34

2028

34

2029

34

2030

34

2,0 2,3 3,2 3,5 3,9 4,3 4,7 5,0 5,3 5,6

5,8 6,10,0 0,0

0,7 1,0 1,5 1,8

# Subsribers

Business (Mln )

Maintenance

Area 1 system developmentand business

start-upCapex distribution

Area 4&5 system

“Scaling-up”

Overall about 621 Mln € Capex in 17 years


Area 2&3 system

“Scaling-up”


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GINA Capex - Details by Phase Business stand-alone segment


BACKUPPHASE 1: COST ELEMENTS HARDWARE SOFTWARE DEVELOPMENT TOTAL

CORE INFRASTRUCTURE -SYSTEM 6.860.000 4.676.000 1.526.000 13.062.000

CORE INFRASTRUCTURE -APPLICATION 5.405.085 2.963.695 5.120.343 13.489.123

CORE INFRASTRUCTURE -TOTAL 12.265.085 7.639.695 6.646.343 26.551.123

SERVICE CENTRES-TOTAL 17.640.000 15.120.000 238.000 32.998.000

TEST ENVIRONMENT 96.250 43.050 42.000 181.300

DEVELOPMENT ENVIRONMENT 70.000 35.000 26.250 131.250

TOTAL -IT CORE 30.071.335 22.837.745 6.952.593 59.861.673

Other Material Costs 14.000.000 Other Non Material Costs 3.500.000

PHASE 2 & 3: COST ELEMENTS HARDWARE SOFTWARE DEVELOPMENT TOTAL

CORE INFRASTRUCTURE -SYSTEM 3.430.000 2.338.000 763.000 6.531.000






TOTAL -IT CORE 15.035.668 11.418.873 3.476.296 29.930.836



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GINA Capex profile (2013-2030) –Business + Private segments

0

20

40

60

€80M

2013

26

2014

52

2015

18

2016

36

2017

55

2018

29

2019

48

2020

66

2021

40

2022

40

2023

40

2024

40

2025

40

2026

40

2027

40

2028

40

2029

40

2030

40

2,0 2,3 3,2 3,5 3,9 4,3 4,7 5,0 5,3 5,6 5,8 6,10,0 0,0 0,7 1,0 1,5 1,8

4,3 5,2 6,9 7,7 8,6 9,4 10,1 10,6 11,1 11,6 12,2 12,70,0 0,0 0,7 1,0 1,5 3,7

# Subsribers

Business (Mln )

# Subsribers Business

+ Consumer (Mln )

Overall about 731 Mln € Capex in 17 years


Capex distribution

Maintenance

Area 1 system developmentand business

start-up

Area 4&5 system

“Scaling-up”

Area 2&3 system

“Scaling-up”


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GINA Capex - Details by Phase Business + Private segments


BACKUPPHASE 1: COST ELEMENTS HARDWARE SOFTWARE DEVELOPMENT TOTAL







TOTAL -IT CORE 30.071.335 22.837.745 6.952.593 59.861.673


PHASE 2 & 3: COST ELEMENTS HARDWARE SOFTWARE DEVELOPMENT TOTAL







TOTAL -IT CORE 21.479.525 16.312.675 4.966.138 42.758.338



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EGNOS signal and SG&A Costs- Main Assumptions

• Commissions to sales agent (either belonging to third parties or to an own sales force network) equal to 5% of total revenues (based on telecom benchmark where commissions go from 4 to 8% of revenues)

Marketing costs

Administration, Finance &

Control costs

Commercial costs

Other Costs

• 0,9% of the revenues (based on telecom benchmarking) for advertising and promo costs for product launch, customer retention initiatives and brand/product awareness building

• Staff of 300 employees for the pan-European service provider at regime condition costing 80k€ each (2,2% of revenues)

• Rent and other minor costs assumed to be 0,7% of the revenues

• Lost revenues due to claims and frauds have been assumed:• 0,5% of toll collected for Infrastructure operators

• 1% of toll collected for Municipalities

EGNOSSignal Costs

* GIROADS study relevant to EGNOS System operating costs: system operations costs between 30 and 35 million euros per annum (cost allocation for the road domain between 3 and 15 million euros per year)

• Galileo Concessionaire costs for GNSS services included EDAS equal to 1,5 € per annum*



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GINA Penetration Strategy

Area 2

Area 1

Area 3

Area 4

Area 5

• 5 geo-cluster have been identified :- Area 1- Central-Southern EU

(Germany, France, Italy, Spain, Portugal and Austria)

- Area 2 -Benelux & Great Britain(Netherlands, Belgium, Luxemburg, UK, Ireland )

- Area 3 - Northern Europe(Denmark, Sweden, Finland, Latvia, Estonia and Lithuania )

- Area 4 - Eastern Europe(Poland, Czech Rep., Slovakia, Slovenia, Hungary, Romania and Bulgaria )

- Area 5 - Mediterranean Island(Greece, Malta, Cipro)

• For an EETS provider, covering all Europe in a “big bang” fashion seems to be very tough both from an economical and operational point of view and a progressive geographical penetration seems to be the only feasible solution

• In order to define a progressive penetration plan, geo-clusters have been defined using the following criteria:

- Geo-adjacency and Trans European Network (TEN-T) priority axis- Actual Road Charging scheme- Upcoming Road Charging projects



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GINA Penetration Plan

Central-Southern Europe(Area 1)

Central-Southern Europe(Area 1)

Benelux &Great Britain

(Area 2)

Benelux &Great Britain

(Area 2)

Northern Europe(Area 3)

Northern Europe(Area 3)

Eastern Europe(Area 4)

Eastern Europe(Area 4)

Mediterranean Island(Area 5)

Mediterranean Island(Area 5)

2013 2014 2015 2016 2017 2018 2019 2020 2021 202220122011 2023

Launch of GINA for BUSINESS SEGMENT

AnnualToll Coll.(2009)

Nr.Countries

MainActual

Scheme

Penetration Plan

20,4 M€ 6Toll system

for all vehicles

0,3 M€ 5 Toll free

0,4 M€ 6 Toll free

0,9 M€ 7 Vignette

0,5 M€ 3Toll system

for all vehicles

The implementation plan have been defined with the objective of maximizing penetration and optimizing operational and capital expenditure


Launch of GINA for

CONSUMER SEGMENT

Launch of GINA for

CONSUMER + BUSINESS SEGMENT

Launch of GINA for


Launch of GINA for


Launch of GINA for



• Company’s

• logo

GINA Market Share

Player 3

15%

Player 2

20%

Other

players

35%

GINA 30%

• The EETS market has been assumed to be characterized by the presence of few big players due to:

- very high capital requirements - institutional restrictions (i.e. certification/ standardization

issues on road charging)

• EETS Service providers may come from different industries, i.e.:

- Oil companies- Banks & financial institutions- Telco operators- Road Operator/Toll Chargers

Competitive Arena &

GINA Market Share

• GINA Service Provider have been assumed to reach a market share around 30% of the EETS market

• GINA market leadership assumption have been driven by:

- GINA SP would be one of the first entrant - GINA SP would have a technological competitive

advantage based on EGNOS/Galileo performance



• Company’s

• logo

GINA Business Case Scenarios- Main Assumptions

Business + Private

Segment


Business stand-alone

Segment

• EETS Overall Penetration in the Business Segment for each country belonging to the different areas has been supposed 8-10% in the launch year and growing 40% in the first 2 years, 8% for the following 8 years and 2% from the 10th year on

• GINA Market Share 30%

• Price of Base package: from 12 €/month in 2015 to 8,5 €/month in 2030

• Discount for the first submission year: 40%

• % of roaming: 20%

• EETS Overall Penetration in the Private Segment for each country belonging to the different areas has been supposed 3% in the launch year and growing 25% in the first 2 years, 8% for the following 4 years and 2% from the 7th year on

• GINA Market Share 30%

• Price of Base package: from 4 €/month in 2018 to 3 €/month in 2030

• Discount for the first submission year: 40%

• % of roaming: 10%


• Company’s

• logo

Content






• Revenues generation potential

• Cost structure definition

• Profitability analysis




• Company’s

• logo

0

10

20

30

40

50

0

10

20

30%

2011

37

2012

37

2013

38

2014

38

2015

38

2016

39

2017

39

2018

40

2019

40

2020

41

2021

41

2022

42

2023

42

2024

43

2025

44

2026

45

2027

46

2028

47

2029

48

2030

48

15% 17% 19% 26% 28% 31% 33% 36% 37% 39% 40% 41% 42%6% 9% 13%EETS Penetration

1,8 2,0 2,3 3,2 3,5 3,9 4,3 4,7 5,0 5,3 5,6 5,8 6,10,7 1,0 1,5# GINA Users ( Mln )

Market potential vs GINA Penetration - Business segment

GINAPenetration (%)

No. of commercial vehiclesin EU27 (Mln)

GINA Service Provider business segment users would pass from 0,7Mln in 2015 to 6Mln in 2030, with a penetration of ~12% on the overall

addressable market at regime condition



• Company’s

• logo

GINA Pricing Scheme- Business Segment


Business

Service Price

Toll Chargers

Basic

P

ackag

eA

dd

On

• Smart OBU without GUI

• EFC

• E-CALL

• Fleet Management/ Basic

12-8,50€/month

10 €/month

2 €/month

2 €/month

8 €/month

• Fleet Management/ Tracking & tracing

• Theft management

• Traffic info system

• Navigation services/ Dynamic re-routing

• Wireless GUI

End Users

Municipalities

• Percentage on toll collection 2%


5

10

€15

12,0

11,2

10,5

10,0

9,5

9,2

8,9

8,5

2015 2017 2019 2021 2023 2025 2027 2029

Price Evolution (€/month)

• In order to maximize penetration and service usage a 40% discount on the first year subscription fee has been assumed


• Company’s

• logo

GINA Revenues streams evolution (2015-2030)

0

200

400

600

800

€1.000M

2015

58

32

94

2016

120

48

175

2017

174

72

256

2018

221

88

11

321

2019

247

98

358

2020

269

110

393

2021

336

152

504

2022

393

168

579

2023

427

187

632

2024

463

207

691

2025

502

228

753

2026

530

241

795

2027

550

254

829

2028

572

268

865

2029

593

281

900

2030

614

294

28

936

User-fee Add-on VAS Motorway % fee

Revenues streams break down

• End-user fees are the most important revenues stream accounting for ~66% of total revenues at regime conditions

• VAS fees account for about 31% of total revenues



• Company’s

• logo

Content












• Company’s

• logo

GINA Cost structure elements

• The cost structure is referred to the GINA Service Provider intended as the company that sells different ITS service packages to final customers by aggregating inputs of specific service providers

• Main costs element are the following:

Telecommunication costs

VAS Provisioning costs

OBU related costs (Leasing, Installation, Assistance)

Core IT Infrastructure costs ( Central Infrastructure, Service Centers)

EGNOS signal guarantee costs

Lost Revenues

SG&A ( Selling commissions, marketing expenses, administrative and othe costs)

D&A (Depreciation and Amortization relevant to Capital Expenditure)

1

2

43

5

6

8

7


9


• Company’s

• logo

GINA Cost Structure evolution

0

200

400

600

800

€1.000M

2015

36

28

30

31

167

2016

40

43

45

208

2018

33

34

33

66

73

75

335

2020

37

42

31

67

87

86

374

2022

37

61

34

88

130

117

503

2024

36

73

34

29

103

157

140

584

2026

34

84

34

33

113

182

160

652

2028

38

92

34

36

122

201

174

711

2030

38

99

34

39

132

220

190

768

Cost Structure evolution

7

5

6

4

2

1

3

8

The cost structure remains approximately constant along the Business Plan horizon


9


• Company’s

• logo

GINA Steady state (2030)cost breakdown

0

200

400

600

800

€1.000M

Telco

190

VAS

Costs

220

OBU

132

Assistance

Costs

39

OPEX

34

EGNOS

service

9

Lost

Revenues

7

SG&A

99

D&A

38

TOTAL

768

25% 100%29% 17% 5% 4% 1% 1% 13% 5%25% 100%29% 17% 5% 4% 1% 1% 13% 5%% on tot% on tot

Steady state (2030) cost breakdown

• Cost structure at steady-state condition (2030) amounts to ~ 770 M€

• Telecom costs are the largest cost items, for ~55% of total costs (including VAS)

1

2

34 5 6 7

9


8


• Company’s

• logo

Content












• Company’s

• logo

GINA Profitability

-1.000

-500

0

500

1.000

2015

94

-144

2016

175

-180

2017

256

-253

2018

321

-302

2019

358

-318

2020

393

-337

2021

504

-436

2022

579

-465

2023

632

-504

2024

691

-548

2025

753

-593

2026

795

-618

2027

829

-645

2028

865

-673

2029

900

-701

2030

936

-730

-51 142 159 176 184 192 199 206-6 3 18 39 56 68 114 128EBITDA ( Mln € )

-54% 21% 21% 22% 22% 22% 22% 22%-3% 1% 6% 11% 14% 14% 20% 20%% on revenues

EBITDA figures stably positive starting from 2017,growing to 206 M€ in 2030 (22% of revenues)

Mln €

Profitability evolution



• Company’s

• logo

GINA EBIT formation – Steady-State (2030)

0

200

400

600

800

€1.000M

Revenues

936

Telco

-190

VAS

Costs

-220

OBU

-132

Assistance

Costs

-39

-34

EGNOS

service

-9

Lost

Revenues

-7

SG&A

-99

EBITDA

206

D&A

-38

EBIT

168

100%22% -4% 18%

-20% -23% -14% -4% -4%-1% -1% -11%

% su Revenues 100%22% -4% 18%

-20% -23% -14% -4% -4%-1% -1% -11%

% su Revenues

OPEX

• Steady-State (2030) EBIT is around 18% of total revenues

• Telco costs are the largest cost item accounting for about 43% of total revenues, followed by OBU costs accounting for about 18% of total revenues

Steady State (2028) EBIT formationVariable Costs

Fixed costs



• Company’s

• logo

GINA Free cash flow analysis

-100

-50

0

50

100

150

2013

-26

2014

-62

2015

-69

2016

-37

2017

-41

2018

-7

2019

-2

2020

-3

2021

23

2022

50

2023

58

2024

66

2025

76

2026

86

2027

91

2028

97

2029

101

2030

105

-243 -247 -224 -174 -116 -50 26 111 202 299 400 505-26 -88 -156 -193 -234 -241

Cumulative

• Unlevered Free Cash flow positive after 6 years from start-up

• Cumulative FCF positive from 2025 (10 years after start-up)

• 2012 NPV is ~ 388 M€ assuming a WACC equal to 8%

Unlevered Free cash flow (Mln €)



• Company’s

• logo

Content












• Company’s

• logo

0

100

200

300

2

4

6

8

10%

2011

249

2012

251

2013

254

2014

256

2015

258

2016

261

2017

263

2018

266

2019

268

2020

271

2021

273

2022

276

2023

279

2024

281

2025

284

2026

287

2027

290

2028

293

2029

296

2030

299

2,3% 2,9% 3,6% 4,6% 5,1% 5,6% 6,1% 6,3% 6,5% 6,7% 6,9% 7,1% 7,3%EETS Penetration

1,8 2,3 2,9 3,8 4,2 4,7 5,1 5,3 5,6 5,8 6,1 6,3 6,5# GINA Users ( Mln )

0

Market potential vs GINA Penetration – Private segment

GINAPenetration (%)

No. of cars in EU27 (Mln)

GINA Service Provider private segment users would pass from 1,8 Mln in 2018 to 6,5 Mln in 2028, with a penetration of ~2% on the overall

addressable market at regime condition



• Company’s

• logo

GINA Pricing Scheme- Private Segment


Private

Service Price

Toll Chargers

Basic

P

ackag

eA

dd

On

End Users

Municipalities



Price Evolution (€/month)

• In order to maximize penetration and service usage a 40% discount on the first year subscription fee has been assumed

• Smart OBU without GUI

• EFC

• E-CALL

4-3€/month

1 €/month

1 €/month

3 €/month

• Theft management

• Traffic info system

• Navigation services/ Dynamic re-routing

• Wireless GUI

2,0

3,0

4,0

€5,0

4,0

3,7

3,5

3,3

3,2

3,1

3,0

2018 2020 2022 2024 2026 2028 2030


• Company’s

• logo

GINA Revenues streams evolution Business + Private (2015-2030)

0

500

1.000

€1.500M

2015

58

94

2016

120

48

175

2017

174

72

256

2018

112

274

15

401

2019

129

345

17

491

2020

150

388

19

558

2021

205

484

22

713

2022

229

562

25

817

2023

256

611

27

895

2024

284

661

29

976

2025

310

707

1.051

2026

329

739

1.102

2027

348

764

1.148

2028

368

790

1.196

2029

388

817

1.244

2030

407

843

1.291

User-fee Add-on VAS Motorway % fee Urban % fee


• End-user fees remain the most important revenues stream accounting for ~65% of total revenues

• Fee from municipalities applied to consumer segment only are completely negligible


Launch of GINA Offer for private

segment


• Company’s

• logo

GINA Revenues streams evolution Business + Private (2015-2030)

0

500

1.000

€1.500M

2015

58

94

2016

48

120

175

2017

72

174

256

2018

15

88

52

221

401

2019

17

98

98

247

491

2020

19

110

119

269

558

2021

22

53

152

148

336

713

2022

25

60

168

169

393

817

2023

27

69

187

184

427

895

2024

29

77

207

198

463

976

2025

82

228

205

502

1.051

2026

88

241

209

530

1.102

2027

94

254

213

550

1.148

2028

100

268

218

572

1.196

2029

107

281

224

593

1.244

2030

113

294

229

614

1.291

30% 29% 29% 29% 29% 29% 28%21% 28% 31% 30% 30% 30%

% Private segment

Revenues on Total

Revenues

User-fee Business Add-on VAS Business Motorway % fee Urban % fee


Private segment revenues up to 30% of total revenues



segment

User-fee Private Add-on VAS Private

*

* Motorway % fee split 50-50 between Business and Private; Urban % fee assigned 100% to Private segment


• Company’s

• logo

Content












• Company’s

• logo

GINA Cost Structure evolution (Business + Private)

0

250

500

750

1.000

€1.250M

2015

28

31

30

46

176

2016

40

45

43

206

2018

86

113

91

56

36

451

2020

99

144

116

51

50

46

545

2022

132

194

171

57

74

45

726

2024

149

42

231

208

57

88

43

840

2026

160

47

256

239

57

99

923

2028

172

51

277

265

57

108

45

1.002

2030

185

55

300

292

57

116

45

1.079

Cost Structure evolution

7

5

6

4

2

1

3

8

The cost structure remains approximately constant along the Business Plan horizon


9


• Company’s

• logo

GINA Steady state (2030)cost breakdown (Business+Private)

0

250

500

750

1.000

€1.250M

Telco

300

VAS

Costs

292

OBU

185

Assistance

Costs

55

OPEX

57

EGNOS

service

19

Lost

Revenues

10

SG&A

116

D&A

45

TOTAL

1.079

28% 100%27% 17% 5% 5% 2% 1% 11% 4%28% 100%27% 17% 5% 5% 2% 1% 11% 4%% on tot% on tot

Steady state (2030) cost breakdown

• Cost structure at steady-state condition (2030) amounts to ~ 1080 M€

• Telecom costs are the largest cost items, for ~55% of total costs (including VAS)

1

2

34

5 6 7

9


8


• Company’s

• logo

Content












• Company’s

• logo

GINA Profitability(Business + Private)

-1.500

-1.000

-500

0

500

1.000

1.500

2015

94

-153

2016

175

-177

2017

256

-258

2018

401

-413

2019

491

-450

2020

558

-499

2021

713

-637

2022

817

-681

2023

895

-736

2024

976

-797

2025

1.051

-849

2026

1.102

-882

2027

1.148

-918

2028

1.196

-957

2029

1.244

-996

2030

1.291

-1.034

-59 179 201 220 229 239 248 257-3 -2 -12 41 59 75 136 159EBITDA ( Bn € )

-63% 18% 19% 20% 20% 20% 20% 20%-2% -1% -3% 8% 11% 11% 17% 18%% on revenues

EBITDA figures stably positive starting from 2019,growing to 257 M€ in 2030 (20% of revenues)

Mln €

Profitability evolution



• Company’s

• logo

GINA EBIT formation – Steady-State (2030)Business + Private

0

500

1.000

€1.500M

Revenues

1.291

Telco

-300

VAS

Costs

-292

OBU

-185

Assistance

Costs

-55

-57

EGNOS

service

-19

Lost

Revenues

-10

SG&A

-116

EBITDA

257

D&A

-45

EBIT

212

100% 20% -3% 16%-23% -23% -14% -4% -4% -1% -1% -9%% su Revenues 100% 20% -3% 16%-23% -23% -14% -4% -4% -1% -1% -9%% su Revenues

OPEX

• Steady-State (2030) EBIT is around 16% of total revenues

• Telco costs are the largest cost item accounting for about 46% of total revenues, followed by OBU costs accounting for about 18% of total revenues

Steady State (2028) EBIT formationVariable Costs

Fixed costs



• Company’s

• logo

GINA Free cash flow analysis(Business + Private)

-200

0

200

400

600

2013

-26

2014

-62

2015

-77

2016

-39

2017

-57

2018

-41

2019

-8

2020

-12

2021

24

2022

60

2023

73

2024

85

2025

97

2026

108

2027

113

2028

121

2029

127

2030

132

-115 -38 -298 -239 -165 -81 16 124 237 359 486 618-27 -76 -117 -129 -145 -161

Cumulative

• Unlevered Free Cash flow positive after 6 years from start-up

• Cumulative FCF positive from 2025 (10 years after start-up)

• 2012 NPV is ~ 485 M€ assuming a WACC equal to 8%

Unlevered Free cash flow (Mln €)



segment


• Company’s

• logo

Scenarios comparison- Key Figures

# Subscribers in 2030

Revenues in 2030

EBITDA in 2030

EBIT in 2030

NPV (e.c. 2012; WACC 8%)

• 6,1 Mln


Scenario 1

(Business)

Scenario 1

(Business + Consumer)

• 936 Mln €

• 206 Mln € (22%)

• 168 Mln € (18%)

• 388 Mln €

• 12,7 Mln

• 1.291 Mln €

• 257 Mln € (19,9%)

• 212 Mln € (16,4%)

• 485 Mln €

Enlargement of business perimeter to Consumer Segment increases overall profitability in absolute terms (EBIT from 168 Mln€ to 212 Mln€),

but penalizes it in relative terms (from 18% to 16,4%)


• Company’s

• logo

• Monthly end-user fees are by far the most important source of revenues

• Toll chargers % fee have a very limited impact

Executive Summary

Business Model

Market Potential

Revenues Generation

Cost

Profitability

• Progressive geographical penetration through 5 main EU-27 geo-cluster: covering all Europe in a “big bang” mode not feasible from both financial and operational point of view

• Overall EETS market from ~2M vehicles in 2015 to ~42M vehicles in 2030

• GINA EETS Service Provider market share ~30%, allowing to serve ~6M end-users in 2030 for the business segment and 6,5M end-users in the private segment

• The largest cost items are Telco and VAS costs (about 50% of total costs) followed by OBU related costs (~20%)

• GINA EETS Service Provider intended as the company that sells different ITS services to final customers aggregating inputs from specific content providers

• Two main service fees:- monthly user fee from end-users- percentage fee on toll collected from toll chargers

• Significant business opportunity with a good profitability in the long term(EBITDA at regime condition about 20% of Revenues)

• Two main issues:- Long break-even period that requires a significant start-up stress (cumulative FCF positive after 10 years) - High Sensitivity to price changes


gina wp 4.2 business and exploitation plan may 3 rd 2011 gnss for innovative road applications

Documents

eets service provider

eets service users

service usage

eets domains

addon addon service

service exchanges page

basic eets framework

gina d4