WAE proposes to provide diesel generator service to five telecom operators in Mongolia. Under the proposal, WAE would install diesel generators at operator sites, own and maintain the generators, and rent them to the operators for a monthly fee that includes fuel costs. This would provide a standardized high-quality service to operators while generating a new income stream for WAE. The proposal forecasts serving 70 generator sites over five years, with an expected annual profit of $350,000 and total profit of $2.5 million, generating a return on investment of 204.87%. Key factors for success include maintaining competitive costs to operators and reliable generator performance.

1. DIESEL GENERATOR SERVICE
for TELECOM OPERATOR
Otgontugs U.

2. Assumption
• Average annual hours : 250h
• Rental Contract duration: 5 years + (5 years)
• USD rate: 1USD = 1900MNT
• Diesel fuel cost: 1L = 2000 MNT
• Electricity cost: 1kWh = 124 MNT
• Data package: 1Gb = 10,000MNT
• First year: 10 pcs triple operator site, 20 pcs double
operator site
• Annual increase : 3 pcs triple site, 7 pcs double site

3. Operator situation
Operator Mobicom Skytel Unitel Netcom Gmobile
# of site 373 395 390 330
3G / 2G 74 / 299 362 / 256 390
# of gensets 200+ 45 50?
# of portable
gensets
100+ 82 100?
# of person 10 6-8 6-8 30 more
Type of genset Olympian,
aska,
fgwilson
honda
Aska,
Olympian,
fgwilson
honda
Chinese,
CAT,
honda
Aksa, Kipor,
Volvo, Koop,
Russian
Honda
Kipor, buy
gensets
directly
from
Chinese.
Procurement
Genset 14/15
24 + 15 10 + 2 30 + 15 2 + 29 ?
Portable 14/15 40 + 40 13 ?

4. Netcom’s tender opening March 27, 2015
Company name Quotation MNT Discount
MOST
IRRADIANS
Monhorus
WAE

5. Operator’s monthly cost on genset
Cost Portable 6k 9.5kVA 13.5kVA 22kVA 33kVA
Generator 300,000 293,000 360,000 422,000 492,000
Installation* 30,000 98,000 98,000 98,000 98,000
Gen Room - 50,000 50,000 50,000 50,000
Guard salary 80,000 80,000 80,000 80,000 80,000
Fuel cost 25h 125,000 130,000 185,000 265,000 350,000
PM** - 100,000 110,000 120,000 135,000
Electricity*** 15,000 15,000 15,000 15,000
CM mod data
CM service
Cost per kWh 4,460 4,506 3,592 2,625 2,033
Total MNT 535,000 766,000 898,000 1,050,000 1,220,000
* - install location 500km ** - include Technical Labor, *** - for battery charger& JWH

6. Current Problem for Operators
At Any site, any Soum center, any Aimag center
Mobicom 22kVA
Unitel 13.5kVA
Netcom 33kVASkytel 9.5kVA
Gmobile 6.5kVA
Different product, different service quality,
difficult to maintain multi vendor gensets.

7. WAE solution
Mobicom 22kVA
Unitel 13.5kVA
Netcom 33kVA
Skytel 9.5kVA
Gmobile 6.5kVA
WAE 88kVA
WAE install diesel generator, operate, maintenance,
rent it for telecom operators, 5years duration
get monthly rent fee and working hours fuel fee

8. Condition Monitoring Service

9. WAE monthly cost on genset
Site Double
22kVA
Double
33kVA
Triple
55kVA
Quad
88kVA
Generator 422,000 492,000 550,000 670,000
Installation 98,000 98,000 110,000 120,000
Room 50,000 50,000 50,000 50,000
Guard salary 80,000 80,000 80,000 80,000
Diesel fuel 25h 265,000 350,000 785,000 900,000
PM* 120,000 135,000 150,000 165,000
Electricity** 15,000 15,000 20,000 20,000
CM modem 50,000 50,000 50,000 50,000
CM service&data 60,000 60,000 60,000 60,000
Cost per kWh 2,900 2,217 1,855 1,322
Total MNT 1,160,000 1,330,000 1,855,000 2,115,000
Operators cost 1,664,000 1,948,000 1,714,000 3,896,000

10. 6W2H
• Who: Mobicom, Skytel, Unitel, Netcom, Gmobile
• What: Supply diesel generator service
• When: 5 years Contract duration + 5years
• Where: at any site, with 2 or 3 operators
• Whom: May cooperate with Netcom
• How (many): 10 pcs triple operator site, 20 pcs
double operator site at first year. Then add 3 pcs
triple, 6 pcs double, 1pc quad site every year.
• How (operate):WAE install diesel generators,
own, operate, maintenance, and get monthly rent
fee and fuel fee of additional working hours.

11. SWOT analysis
STRENTH
High Quality product and service
4 years of warranty
Professional technicians team
New source of income
WEAKNESS
High service cost
Retail CAT generator costs high
OPPORTUNITY
CAT Condition monitoring service
Avoid price competition from low-end
Genset network whole Mongolia
Utilize gensets in WAE stock
THREAT
Economic crisis
Exchange rate
Competitor may do same as WAE
Layoffed employee will go to competitor

12. CROSS SWOT
(O) Condition monitoring / (W) High service cost
Condition monitoring help to control un-neccessary service cost.
(T) Economic crisis / (S) High quality service
Operators needn’t own gensets, get high-qualified service at same costs, they owned.
(S) 4 years of warranty / (O) Standardized service quality
WAE will become beneficiaries of 4 years service warranty
(O) Utilize WAE stock / (S) New source of income
Using gensets of WAE stock, get new source of income for company
(O) Genset network whole Mongolia / (S) High quality of product and service
Create service driven sales opportunity

13. Value to Customers
• No need High cost Initial investment
• No need worry on operation & maintenance
• Get high quality service from WAE
• Monthly fee as same as pay now on own
gensets
• Free from multi vendor’s head-ache.

14. Critical Success Factor (CSF)
Site Double
22kVA
Double
33kVA
Triple
55kVA
Quad
88kVA
Cost per kWh 2,900 2,217 1,855 1,322
Total MNT 1,160,000 1,330,000 1,855,000 2,115,000
Operator need 9.5 + 13.5 kVA 13.5 + 22 kVA 9.5+13.5+ 22 2X13.5 + 2X22
Operators cost 1,664,000 1,948,000 2,714,000 3,896,000
Difference MNT 474,000 578,000 859,000 1,631,000
Difference % 30% 32% 32% 45%
Difference is what WAE want to earn monthly

15. Service price structure
• (A) Monthly fee include 25h fuel cost +
additional hours fuel cost
• (B) Monthly fee not include fuel cost +
Cost/kWh * total KW (powermeter)
• (C) No monthly fee,
only Cost/kWh * total KW (powermeter)
* - In service price calculation, fuel cost 1L = 3000MNT

16. • Monthly fee include 25h fuel cost
+ additional hours fuel cost
Service price structure (A)
Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW
Monthly fee 766,000 898,000 1,050,000 1,220,000
Fuel
consumption L
2.6 3 5.3 7
Additional
hours fuel cost
per hour
7,800 11,100 15,900 21,000
Advantages Disadvantages
Monthly fee is high

17. • Monthly fee not include fuel cost
+ cost / kWh * total kW (powermeter)
Service price structure (B)
Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW
Monthly fee 630,000 710,000 790,000 870,000
Cost per kWh 1,000 1,000 1,000 1,000
Advantages Disadvantages
Most feasible price structure
Pay as use
Service price structure (B) used for further calculation

18. • No monthly fee,
Cost/kWh * total KW (powermeter) only.
Service price structure (C)
Site up to 6.8kW Up to 10kW Up to 16kW Up to 24kW
Monthly fee
Cost per kWh 4,400 3,390 2,450 1,900
Advantages Disadvantages
Low operating hours, drive loss to WAE
High cost per kWh

19. Product / Service Forecast
Fiscal year 2016 2017 2018 2019 2020 Total
year 1 2 3 4 5
Double
22kVA
10 3 3 3 3 22
Double
33kVA
10 3 3 3 3 22
Triple
55kVA
10 3 3 3 3 22
Quad
88kVA
1 1 1 1 4
Total 30 10 10 10 10 70
Operator’s
Equivalent
70 25 25 25 25 170
SERVICE

20. Cost Analysis
• Initial investment: 1,242,000,000 MNT
• 30 pcs gensets, include DE55E2, DE33E2, and
DE22E3
• Annual income: 817,320,000 MNT, annual
cost: 467,080,000 MNT
• Profit in Cash (for 5 years): 2,544,480,000
MNT
• ROI (for 5 years): 204.87%

21. Financial Projection (initial investment of 2016)
year 1 year2 year3 year 4 year5
Investment 1,242,000,000.00
Equity 1,242,000,000.00
Debt 0.00
Income 817,320,000.00 817,320,000.00 817,320,000.00 817,320,000.00 817,320,000.00
Yearly fee 598,200,000.00 598,200,000.00 598,200,000.00 598,200,000.00 598,200,000.00
Fuel 219,120,000.00 219,120,000.00 219,120,000.00 219,120,000.00 219,120,000.00
Cost 467,080,000.00 467,080,000.00 467,080,000.00 467,080,000.00 467,080,000.00
Guard salary 28,800,000.00 28,800,000.00 28,800,000.00 28,800,000.00 28,800,000.00
Fuel 168,000,000.00 168,000,000.00 168,000,000.00 168,000,000.00 168,000,000.00
PM 49,000,000.00 49,000,000.00 49,000,000.00 49,000,000.00 49,000,000.00
Electricity 6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00 6,000,000.00
CM service and data 21,600,000.00 21,600,000.00 21,600,000.00 21,600,000.00 21,600,000.00
Interest 8.00% 0.00 0.00 0.00 0.00 0.00
Depriciation 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00
profit before tax 350,240,000.00 350,240,000.00 350,240,000.00 350,240,000.00 350,240,000.00
Tax 35,024,000.00 35,024,000.00 35,024,000.00 35,024,000.00 35,024,000.00
Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00
Cash Flow
Cash income 508,896,000.00 508,896,000.00 508,896,000.00 508,896,000.00 508,896,000.00
Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00
Depriciation 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00 193,680,000.00
Cash cost 1,242,000,000.00 0.00 0.00 0.00 0.00 0.00
Investemnt 1,242,000,000.00
repayment 0.00 0.00 0.00 0.00 0.00
Profit in Cash 508,896,000.00 1,017,792,000.00 1,526,688,000.00 2,035,584,000.00 2,544,480,000.00
Debt 0.00
repayment 0.00 0.00 0.00 0.00 0.00
expectation 0.00 0.00 0.00 0.00 0.00 0.00

22. Financial Projection (investment of 2017-2020)
year 1 year2 year3 year 4 year5
Investment 426,000,000.00
Equity 426,000,000.00
Debt 0.00
Income 289,560,000.00 289,560,000.00 289,560,000.00 289,560,000.00 289,560,000.00
Yearly fee 211,680,000.00 211,680,000.00 211,680,000.00 211,680,000.00 211,680,000.00
Fuel 77,880,000.00 77,880,000.00 77,880,000.00 77,880,000.00 77,880,000.00
Cost 162,384,000.00 162,384,000.00 162,384,000.00 162,384,000.00 162,384,000.00
Guard salary 9,600,000.00 9,600,000.00 9,600,000.00 9,600,000.00 9,600,000.00
Fuel 61,200,000.00 61,200,000.00 61,200,000.00 61,200,000.00 61,200,000.00
PM 15,600,000.00 15,600,000.00 15,600,000.00 15,600,000.00 15,600,000.00
Electricity 2,040,000.00 2,040,000.00 2,040,000.00 2,040,000.00 2,040,000.00
CM service and data 7,200,000.00 7,200,000.00 7,200,000.00 7,200,000.00 7,200,000.00
Interest 8.00% 0.00 0.00 0.00 0.00 0.00
Depriciation 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00
profit before tax 127,176,000.00 127,176,000.00 127,176,000.00 127,176,000.00 127,176,000.00
Tax 12,717,600.00 12,717,600.00 12,717,600.00 12,717,600.00 12,717,600.00
Profit after tax 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00
Cash Flow
Cash income 426,000,000.00 181,202,400.00 181,202,400.00 181,202,400.00 181,202,400.00 181,202,400.00
Profit after tax 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00 114,458,400.00
Depriciation 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00 66,744,000.00
Cash cost 426,000,000.00 0.00 0.00 0.00 0.00 0.00
Investemnt 426,000,000.00
repayment 0.00 0.00 0.00 0.00 0.00
Profit in Cash 181,202,400.00 362,404,800.00 543,607,200.00 724,809,600.00 906,012,000.00
Debt 0.00
repayment 0.00 0.00 0.00 0.00 0.00
expectation 0.00 0.00 0.00 0.00 0.00 0.00

23. Financial Projection (Cumulative)
2015 2016 2017 2018 2019 2020
Investment 1,242,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00
Equity 1,242,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00 426,000,000.00
Debt 0.00 0.00 0.00 0.00 0.00 0.00
Income 817,320,000.00 1,106,880,000.00 1,396,440,000.00 1,686,000,000.00 1,975,560,000.00
Yearly fee
Fuel
Cost 467,080,000.00 629,464,000.00 791,848,000.00 954,232,000.00 1,116,616,000.00
Guard salary
Fuel
PM
Electricity
CM service and data
Interest
Depriciation
profit before tax 350,240,000.00 477,416,000.00 604,592,000.00 731,768,000.00 858,944,000.00
Tax 35,024,000.00 47,741,600.00 60,459,200.00 73,176,800.00 85,894,400.00
Profit after tax 315,216,000.00 429,674,400.00 544,132,800.00 658,591,200.00 773,049,600.00
Cash Flow
Cash income 508,896,000.00 690,098,400.00 871,300,800.00 1,052,503,200.00 1,233,705,600.00
Profit after tax 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00 315,216,000.00
Depriciation 193,680,000.00 260,424,000.00 327,168,000.00 393,912,000.00 460,656,000.00
Cash cost 0.00 0.00 0.00 0.00 0.00
Investemnt
repayment 0.00 0.00 0.00 0.00 0.00
Profit in Cash 508,896,000.00 1,198,994,400.00 2,070,295,200.00 3,122,798,400.00 4,356,504,000.00
Debt 0.00
repayment 0.00 0.00 0.00 0.00 0.00
expectation 0.00 0.00 0.00 0.00 0.00 0.00

24. Conclusion
• Win-win solution for WAE and telecom
operators
• Need to work closely with operators
• WAE have financial capability to provide such
service.
• This is preliminary financial projection. Need
to do more for correct financial calculation.
• Thank you for your attention.

25. WAE DIESEL GENERATOR NETWORK