How much for the front input?
The total one-time investment is approximately $438,000.
Core equipment is $150,000. Including NATSHEL_AUTH_GATEWAY, multi-functional gateways, billing systems, OLT, core switchboards. NATSHEL_AUTH_GATEWAY, which is responsible for user authentication and billing, OLT, which is responsible for fibre optic convergence, the core switcher for data transmission throughout the network.
The terminal equipment costs $200,000. Each household is equipped with a light cat, which will cost an average of $200 per house for the installation of construction.
The value-added equipment is $72,000. Four self-service machines are equipped with $18,000 each.
The advance period is set at $16,000. This includes field surveys, programme design and other pre-construction work.
Under this configuration, the first one-time investment is 438,000 yuan.
What do you have to invest every year?
Once built, the system has an annual operating cost.
The cost of the human resources is $120,000, based on 1.5 person teams, at $80,000 per person per year. The cost of bandwidth is $60,000, calculated as $5,000 per month. The cost of the network materials is $15,000, including maintenance and replacement of equipment.
The first side is responsible for 25,000 yuan, mainly for electricity.
The two sides together cost $240,000 a year.
Where's the money coming from?
The benefits come not from a single channel but from three sources.
This is the most direct source of income, and tenants pay monthly contributions.
The number of self-help machines is $126,000. 900 households are housed, each consuming $50 per month on the machine, with a total sales value of $45,000 per month, a gross Māori rate of 35% and a net monthly profit of $10.5 million, or $126,000 per year.
The value-added services of the network are 432,000 yuan. 30% of 600 households upgrade their high-speed networks, charging an additional $20 per month, or $432,000 a year later. This benefit depends on the tenants’ usage habits and speed requirements.
Together, the three would yield a total annual gain of $529.2 million.
How does A and B split the proceeds?
The distribution of the proceeds is usually 30% on the A and 70% on the B side.
The first party earns $133.76 million a year. This is a net gain because of the zero invested in the front period. In five years, it accumulates $668.8 million.
The net gain for the year was negative, because it covered $215,000 in operating costs. But B had invested $438,000 in the upfront period, which needed to be recovered from later earnings. Based on a annual net return of $1554,400, the return is about 2.8 years. Five years' cumulative net gain of $777.2 million, with a return rate of approximately 177 per cent.
The return model is not a windfall for B, but the return cycle is around three years and meets most investment project expectations.
What factors affect the return?
The figures in the model are not fixed and several key variables change actual benefits.
The rate of occupancy directly affects the cost of basic services. If the rate is raised from 90% to 95%, it will increase by $36,000.
The bandwidth costs are compressed. If multiple operators dialle instead of single broadband lines, the bandwidth costs can be reduced by 30%.
The value-added service is one of the most important types.
These variables are adjusted to the specific circumstances of the apartment in the actual project. But the logic remains unchanged: increase occupancy, control operating costs and expand value-added services.
How do I.C. talk to A about this model?
The first concerns two issues: how much money can be spent and how much money can be earned.
The bright spot of this model is zero input for the front-side. Equipment, construction, systems are paid by the second side, which provides only space and electricity.
This is a net incremental gain for the apartment operator, without increasing human and administrative costs.
When I come together to discuss this project, the focus is not on a list of equipment but on this investment return framework. The first party calculates that it does not pay up front and then stabilizes its annual red-rate pattern. As A understands, it is a purely profitable project, not an expensive one.
The risk is also emphasized on the B. The first stage of equipment input, the cost of transport and technical problems are left to B. The first side collects money and does not care about technical details. This is critical for many apartment operators who do not want to know the network but only use it.
Finally, we have to talk about real cases. This is how the Chengdu Orbital apartment is done and it's working. There are practical examples where A believes more easily in the feasibility of this model.
This is the whole model. The front-loading of 440,000, B-funded; annual gain 530,000, 37%; A zero input, 670,000 for five years; B-recovered in 2.8 years, with 177% for five years.