【正文】 : CNC team inputs。 industry interviews。 foreign benchmarks。 industry interviews。 various benchmarks。 CNC’s team inputs。 develop local leased lines work in key locations Aggressive deployment of backbone infrastructure to provide unparalleled bandwidth Establish high bandwidth international gateway to differentiate inter access Superior service with clear positioning ? “The clear alternative to CT”ISP Long distance voice Capture early revenue from to fund development of subsequent business models Top 60 POPs by end of year 2024 utilizing mix of leased lines from CT and CNC work Position off voice as first product from “China’s first data carrier” Do not overextend resources in VOIP as it does not fit CNC’s long term strategy Create “dialaround” solutions for business and interconnect terms 17930 6 4503405Interim14Dec99TZDgxSHIEnterprise solutionsPOTENTIAL BUSINESS MODELS COVER WIDE RANGE OF PRODUCT/MARKET ALTERNATIVESOpportunity for growthCurrent market sizeWholesale/carrierConsumer ISP?Domestic and International Long Distance VoiceResidential Med/large enterprise customersCarriersPotential traffic per consumerProductsEmerging dataDataVoiceEmerging data niche 7 4503405Interim14Dec99TZDgxSHIAGENDA Business Models? Domestic and international longdistance voice? Wholesale/carrier? Enterprise solutions? Issues going forward 8 4503405Interim14Dec99TZDgxSHIAPPROACH TO DOMESTIC AND INTERNATIONAL VOICE BUSINESS MODELObjectives Hypothesized ApproachCapture early revenue from launch of prepaid IP calling cards? “Cash cow” for funding other business model developmentPursue prefix and equal access long distance for business customers as soon as possible to begin establishing relationshipsManage pricing and product life cycle effectively to maximize total margin and avoid investing in declining productsDo not overextend ourselves nor blur our “data” imageFight the regulatory battle to ensure favorable approaches to equal access and interconnectMarket calling cards to business customers in the short term for travelling personnelEmphasize quality image/brand to distinguish from CT and Uniposition calling card as first step in being a next generation full services providerEstablish mechanisms to link marketing expenditures with revenue and margin growth by product to ensure effective investmentEmphasize low cost targeted marketing and loyalty programs? Do not overextend? Always emphasize advanced technology and evolution to full services provision 9 4503405Interim14Dec99TZDgxSHIDOMESTIC AND INTERNATIONAL VOICE SUMMARYPreliminary EconomicsPhase I CapEx (2024,2024): ~ B RMB?Fiber/construction: ~ B RMB?IP/DWDM equipment: ~720 M RMB?POP/VOIP: ~530 M RMB?OSS/Network management system: ~100 M RMBOpEx expected to be ~30% of revenue by 2024Market share and revenue estimates 2024?Off DLD: 30%?Off ILD: 30% ~ $2 B RMB?IP Intl. termination: 27%5 year NPV: Essentially breakeven considering off voice alone1Key Issues to be AddressedInterconnect agreements with local PTA’s。 only the most dense areas in short term Focused Deployment ? Leverage existing conduits to lay in major urban areasSuperior service and bandwidth? Target CT’s weakness in service and bandwidth Utilize LMDS in intermediate cities and areas where time to market is critical Wholesale/Carrier Target mobile carriers and ISPs with backbone transport。 1 4503405Interim14Dec99TZDgxSHICONTENT Key strategic principles Regulatory overview Market overview Competition overview Business models Next steps 2 4503405Interim14Dec99TZDgxSHIAGENDA Business Models? Domestic and international longdistance voice? Wholesale/carrier? Enterprise solutions? Issues going forward 3 4503405Interim14Dec99TZDgxSHIEconomic modeling Choice of business modelsto pursue and timingRoadmap for pursuing business models and expected financial performanceIntegrated approach to CNC business planMajorissuesExpectedoutputHow do the market sizing and share assumptions translate into overall top line revenue for CNC?What capital investments will be necessary to build out metro and long haul fiber works?Predicted cash flow profile by business model and selected scenariosAssessment of market opportunitiesHow will China data market develop? How large is the overall opportunity for a new entrant?Overall market sizing and revenue forecast by product areaRegulatory and petitive analysisWhat type of regulatory environment will evolve in China?Will equal access for voice and data be granted and when?What effect will WTO have?Regulatory mapping and CNC share predictions across scenariosStrategic implications and capabilities assessmentMETHODOLOGY BEING USED TO DEVELOP BUSINESS MODELS AND OVERALL STRATEGY Current areas of focus 4 4503405Interim14Dec99TZDgxSHICNC AT A CRITICAL STRATEGIC CROSSROADSPreliminary Conclusions Remendations/Decisions to be MadeOff VOIP predicted to generate to provide breakeven economics for building backbone1 Wholesale revenue provides significant upside potential ?Majority of wholesale revenue relies on access to mobile carriersEnterprise solutions economics very attractive, but substantial plexity and resources involvedHighbandwidth international gateway critical to success in both wholesale and enterprise Economic predictions highly sensitive to a set of key assumptionsAccelerate vendor selection and backbone construction。 time to market criticalCommitment to utilizing IP/DWDM invlolves risk to mobile carrier business?RFP to vendors should be based on product requirements vs. technolo