Capital planning: setting the priorities

Capital planning: setting the priorities

How can telecom companies effectively plan capital investment projects to prioritize key projects?

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An effective plan identifies and prioritizes key projects, linking investment strategies with technology cycles, assessing funding needs and sources of capital, and establishing appropriate financial and market objectives and measurements, such as market share, customer satisfaction, and return on investment. The plan should include a thorough analysis of the current and future business environment, balance maintenance versus new build, and identify partnering opportunities. A plan will include higher risk investments that drive differentiation and growth, but must be balanced, and sit within the company’s overall risk appetite.

According to the survey, telecom companies prioritize capital for those projects and programs with the highest long-term strategic returns. The main issues driving the capital plan are the pace of technological change, competitors’ actions to gain market share, and the need to enter new markets to satisfy changing customer needs, or to grow by diversifying into adjacent sectors.

Key planning imperatives for the telecom sector

  • Creating network differentiation
  • Becoming true information and communications technology (ICT) players
  • Enhancing the customer experience
  • Monetizing data
  • Consolidating and diversifying
  • Competing in spectrum auctions
  • Using resources more efficiently

According to the respondents to KPMG’s 2015 global survey:

  • 73% say the CFO has responsibility for capital planning
  • 95% have standard group capital planning policies and procedures
  • 90% prepare short-term capital plans (less than 3 years), of which 79% roll across years
  • 78% say planning takes more than 3 months
  • 90% of plans are built top-down/bottom-up
  • 74% consolidate projects into strategic programs for capital planning.

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