You are on page 1of 6

SAP Mobile Services

Nextel term fee biz case VSOE


Claudio Romero, Sales Manager Mexico and Central America

SAP Nextel commercials so far


SAP and Nextel has been working under the bill & keep (or mutual forgiveness) model so far

On this model operators with bi-laterals (AA19) in place do not bill each other for international traffic
originated/ terminated into their networks

On a bill & keep model, SAP charge the operator customer a transit fee per MO for the
processing and routing of traffic originated by the carrier

Historically, outside Americas region, the rest of the world always worked on a termination fee
model. Here, operators bill each other for the SMS terminated into their network.

On term model, SAP took care of the billing complexity: SAP pays each operator their term fee.
Operators were able to rely on SAP for the invoicing to/from operators that SAP managed.

SAP Nextel commercials so far (II)


Nowadays, SAP issues an invoice to Nextel for the MO traffic that Nextel sends through SAP.
Oct.

Jan.

Nov.

For example, SAP billed $19,6k USD to Nextel


from October to January MO traffic.

Dec.

As such, SMS-IW is only a cost line item for


Nextel.

SAPs term fee proposal to Nextel


As operators P2P revenues declined, more and more Americas region carriers are moving to a term
fee model (Movistar already did; Iusacell, Claro and Tigo seriously considering it). Also operators look
at this as a measure to stop other carriers from sending A2P traffic through P2P links at no cost.
SAPs proposal is migrating Nextels commercials to term fee model, whereby Nextel will pay a
higher fee per MO (zone dependent based on operators), and SAP will start to pay Nextel a term fee
per MT (zone dependent based on operators)
MO fee paid by Nextel would be made of the destination country term fee cost + SAPs agreed
transit fee. MT fee paid by SAP to Nextel would be equal to the MO fee minus SAPs transit fee

Nextel needs to do nothing. Nextel can continue to rely on SAP for the SMS delivery as usual
and SAP will take care of the billing complexity with the carriers. SAP will issue either an autobilling invoice for Nextel or a statistics statement for Nextel to issue their own invoice.

Nextel turns a cost line item into a new revenue stream with no
additional cost and no technical or administrative effort.

SAPs term fee proposal to Nextel (II)


Oct.
Zone
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Zone 9
Zone 10
Zone 11
Zone 12
Zone 13
Zone 14
Zone 15
Zone 16
Zone 17

Dec.
Billable MO
681,391
12
18
4,166
630
38
107
23
44
367
4,051
80
90
275
1,061
692,353

Billable MT
817,669
10
22
4,999
731
32
89
19
53
306
3,376
67
75
229
884
828,561

SAP Invoice
Op Invoice
Netting
$40,806.5
$40,883.5
-$77.0
$0.0
$0.0
$0.0
$0.4
$0.5
-$0.1
$0.7
$1.1
-$0.4
$202.4
$250.0
-$47.5
$34.9
$36.6
-$1.7
$2.2
$1.6
$0.6
$6.4
$4.5
$1.9
$1.4
$1.0
$0.5
$2.8
$2.6
$0.2
$24.5
$15.3
$9.2
$274.7
$168.8
$105.9
$5.9
$3.4
$2.6
$7.1
$3.8
$3.4
$23.3
$11.5
$11.8
$0.0
$0.0
$0.0
$103.1
$44.2
$58.9
$41,496.2
$41,428.0
$68.2

SAPs invoice would look like this:

Nextels invoice would look like this:

Nov.
Zone
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Zone 9
Zone 10
Zone 11
Zone 12
Zone 13
Zone 14
Zone 15
Zone 16
Zone 17

Zone
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Zone 9
Zone 10
Zone 11
Zone 12
Zone 13
Zone 14
Zone 15
Zone 16
Zone 17

Billable MO
640,887
2
10
8
3,281
578
17
62
16
44
314
1,419
31
73
368
1,577
648,687

Billable MT
769,064
2
8
10
3,937
694
14
52
13
50
262
1,703
26
61
307
1,314
777,517

SAP Invoice
Op Invoice
Netting
$38,380.8
$38,453.2
-$72.4
$0.1
$0.1
$0.0
$0.3
$0.4
-$0.1
$0.3
$0.5
-$0.2
$159.4
$196.9
-$37.4
$32.0
$34.7
-$2.7
$1.0
$0.7
$0.3
$3.7
$2.6
$1.1
$1.0
$0.7
$0.3
$2.8
$2.5
$0.3
$21.0
$13.1
$7.9
$96.2
$85.1
$11.1
$2.3
$1.3
$1.0
$5.8
$3.1
$2.7
$31.2
$15.4
$15.9
$0.0
$0.0
$0.0
$153.2
$65.7
$87.5
$38,891.1
$38,875.8
$15.2

Jan.
Billable MO
685,620
1
2
15
2,632
556
16
200
11
35
594
2,090
90
121
275
1,090
693,348

Billable MT
822,744
1
2
18
3,158
603
13
167
9
35
495
2,130
75
101
235
908
830,695

SAP Invoice
Op Invoice
Netting
$41,059.7
$41,137.2
-$77.5
$0.0
$0.1
$0.0
$0.1
$0.1
$0.0
$0.6
$0.9
-$0.3
$127.9
$157.9
-$30.0
$30.8
$30.2
$0.6
$0.9
$0.7
$0.2
$12.0
$8.4
$3.7
$0.7
$0.5
$0.2
$2.3
$1.8
$0.5
$39.6
$24.8
$14.9
$141.7
$106.5
$35.2
$6.6
$3.8
$2.9
$9.6
$5.1
$4.5
$23.3
$11.8
$11.6
$0.0
$0.0
$0.0
$105.9
$45.4
$60.5
$41,561.6
$41,534.7
$26.8

Zone
Zone 1
Zone 2
Zone 3
Zone 4
Zone 5
Zone 6
Zone 7
Zone 8
Zone 9
Zone 10
Zone 11
Zone 12
Zone 13
Zone 14
Zone 15
Zone 16
Zone 17

Billable MO
675,064
172
11
3,147
625
4
83
26
47
1,682
1,750
34
86
304
2,075
685,109

Billable MT
810,077
206
13
3,690
561
3
69
22
39
1,402
1,602
28
72
253
1,729
819,766

The result of this cross-billing would be:

The net-off of the invoices is that Nextel would owe SAP $200 USD from October to January

Nextel gets a $40k + USD monthly revenue stream

** Note: data is a simulation from October to January traffic and does not constitute a commitment

SAP Invoice
Op Invoice
Netting
$40,427.6
$40,503.8
-$76.3
$0.0
$0.0
$0.0
$5.2
$10.3
-$5.1
$0.4
$0.7
-$0.2
$152.9
$184.5
-$31.6
$34.6
$28.1
$6.6
$0.2
$0.2
$0.1
$5.0
$3.5
$1.5
$1.6
$1.1
$0.5
$3.0
$2.0
$1.1
$112.2
$70.1
$42.1
$118.6
$80.1
$38.5
$2.5
$1.4
$1.1
$6.8
$3.6
$3.2
$25.7
$12.7
$13.1
$0.0
$0.0
$0.0
$201.6
$86.5
$115.2
$41,098.0
$40,988.3
$109.7

SAPs term fee proposal to Nextel (II)


$162k revenue from Oct to Jan
$200 USD cost in 4 months
ene-15
Current model
SAP invoice
Nextel invoice
Netting
New model
SAP invoice
Nextel invoice
Netting

dic-14

nov-14

4,973.00 $

5,048.00 $

4,693.00 $

$
$
$

41,098.00 $
40,988.00 $
110.00 $

38,891.00 $
38,875.00 $
16.00 $

41,561.00 $
41,534.00 $
27.00 $

oct-14

5,035.00 $

TOTAL

19,749.00

41,496.00 $ 163,046.00
41,428.00 $ 162,825.00
68.00 $
221.00

$500k annual revenue + Cost Saving $60k + No complexity


For current volume.
Potential growth as
Nextel migrates more
destination to SAP

Net-off of invoices.
The true monies
paid by Nextel.

SAP issues auto-invoice for


Nextel or statement

You might also like