TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011
TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011
TDC Group Annual Report 2011(6,4MB) - TDC Annual Report 2011
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Risk factors<br />
<strong>TDC</strong> is faced with both internal risks such as operational<br />
risks, and external risks such as macroeconomic and<br />
regulatory risks. How <strong>TDC</strong> mitigates these risks has a<br />
significant impact on <strong>TDC</strong>’s business, financial condition<br />
and results of operations. The following pages describe<br />
risks faced by <strong>TDC</strong>, including their impact and mitigating<br />
factors and initiatives taken by <strong>TDC</strong> to manage the risks.<br />
The risks described below are not the only risks <strong>TDC</strong> faces.<br />
Additional risks not currently known to <strong>TDC</strong> or that <strong>TDC</strong><br />
currently deems to be immaterial may also adversely affect<br />
Risk Description and impact Mitigation<br />
Risk of extended<br />
weak macroeconomic<br />
development<br />
Risk of increased<br />
competitive pressure<br />
• Consumers may reduce their usage of<br />
telecommunication products, and have an increased<br />
incentive to spend time analysing relevant offers due<br />
to an increased cost focus, which may increase churn<br />
and decrease ARPU across products in Consumer,<br />
YouSee and Wholesale. Also, more consumers may<br />
prioritise cost over convenience and choose<br />
individual suppliers for each communication need<br />
where the price is lower, rather than a bundled<br />
product, which may influence the demand for bundled<br />
products such as <strong>TDC</strong> HomeTrio.<br />
• More businesses may go bankrupt, while the<br />
remaining business customers may reduce their<br />
investment levels, which may shrink the<br />
telecommunications market and thus reduce the<br />
contract volume and increase the risk of incurring<br />
losses due to bad debts.<br />
• Decreased demand in the other Nordic countries,<br />
especially in Sweden, where the government has<br />
reduced expectations for future growth in GDP, can<br />
have an impact, mainly on product areas with nonrecurring<br />
revenue.<br />
• <strong>TDC</strong> faces significant competition from wellestablished,<br />
pan-Nordic and national<br />
telecommunications companies, as well as utility<br />
companies and TV distributors. Some of these<br />
competitors are subject to fewer regulatory<br />
requirements in Denmark than <strong>TDC</strong> and base their<br />
price strategy on marginal cost considerations. The<br />
competition may intensify further in the future and<br />
lead to increased churn and decreasing ARPU across<br />
products and services in the consumer, business and<br />
wholesale market in Denmark and the other Nordic<br />
countries.<br />
• A change of platform and technology has increased<br />
the competition from utilities that have rolled out<br />
fibre networks to offer landline telephony, broadband<br />
and TV. <strong>TDC</strong> TV and YouSee are also challenged by<br />
providers that offer pay-TV services on other<br />
platforms, such as utility companies, DTH satellite<br />
distributors, DTT providers and operators offering<br />
TVoIP. Furthermore, foreign distributors in the OTT<br />
market can be expected to gain parts of the VoD<br />
market.<br />
• If operators currently relying on national roaming or<br />
MVNO agreements with <strong>TDC</strong> fast track their own<br />
network rollout, it will have a negative effect on <strong>TDC</strong>'s<br />
wholesale business.<br />
<strong>TDC</strong> <strong>Group</strong> <strong>Annual</strong> <strong>Report</strong> <strong>2011</strong><br />
<strong>TDC</strong>’s business, financial condition and results of<br />
operations.<br />
The risk factors described below are not listed in any order<br />
of priority with regard to their significance or probability. It<br />
is not possible to quantify the significance to <strong>TDC</strong> of each<br />
individual risk factor, as each risk described below may<br />
materialise to a greater or lesser degree and have<br />
unforeseen consequences.<br />
• Focus on high spender intake – e.g. push<br />
smartphones, high broadband requiring services and<br />
broadband value added services, and stimulate SMS<br />
& data usage.<br />
• Launch semi-flat-rate offers in relevant markets.<br />
• Promote proactive customer contact, churn focus and<br />
improved save team instruments.<br />
• Push <strong>TDC</strong> HomeTrio Mini to the low ARPU TVsegment.<br />
• Include more content VAS and build value perception<br />
to justify pricing.<br />
• Expand network capacity for both up- and download.<br />
• Focus more on cross-selling between operator and<br />
integrator businesses.<br />
• Strengthening of the pan-Nordic product offering and<br />
focus on pan-Nordic cooperation and partner sales to<br />
expand appeal to a broader customer range.<br />
• Promote proactive customer contact, a focus on<br />
churn and improved save team instruments.<br />
• Include more content VAS and build value perception<br />
to justify pricing.<br />
• Continue to focus on pipeline management and sales<br />
execution.<br />
• Focus on ‘all IP home entertainment’ and OTT.<br />
• Continue to focus on competing with utility<br />
companies.<br />
• Continue to expand network capacity for both up- and<br />
download.<br />
• Compensate by selling mobile fibre backhaul and<br />
mast positions.<br />
• Provide incentives to retain use of <strong>TDC</strong> network.<br />
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