Professional Documents
Culture Documents
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Table of contents
Company Background
Data Sheet
Questions
01
Additional Information
Company
Background
02
Geographic Benchmarks
Country-wise benchmarks (2015)
GDP Growth
Rate (%)
Telecom
Penetration
(%)
US
2.2%
80%
Argentina
2.9%
83%
Namibia
5.1%
110%
Czech Republic
-0.7%
75%
Competitive
Intensity
Regulatory
Environment
03
Legal Protection
2015
2016
2017
2018
2019
2020
383
425
480
525
567
595
11%
13%
9%
8%
5%
Revenue Growth
Operating Expenses
287
319
360
394
425
446
As a % of revenue
75%
75%
75%
75%
75%
75%
EBITDA
115
128
144
157
170
179
EBITDA Margin
30%
30%
30%
30%
30%
30%
(73.0)
(93.7)
(96.5)
(30.8)
(33.4)
(32.8)
(0.9)
(0.8)
(1.1)
(0.9)
(0.8)
(0.6)
Capital Expenditures
Change in Working Capital
WACC: 10; Tax Rate: 30%
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Exhibit B
2015
2016
2017
2018
2019
2020
297
336
366
391
407
419
13%
9%
7%
4%
3%
Revenue Growth
Operating Expenses
202
228
249
266
277
285
As a % of revenue
68%
68%
68%
68%
68%
68%
EBITDA
104
117
128
137
142
147
EBITDA Margin
35%
35%
35%
35%
35%
35%
(20.8)
(23.5)
(25.6)
(27.4)
(28.5)
(29.4)
(0.8)
(0.5)
(0.4)
(0.4)
(0.2)
(0.2)
2015
2016
2017
2018
2019
2020
12
16
23
36
51
82
30%
47%
58%
42%
60%
16
22
29
40
50
80
134%
140%
126%
111%
98%
97%
(3)
(2)
(3)
(1)
10
19
EBITDA Margin
-23%
-11%
-14%
-3%
19%
23%
Capital Expenditures
(4.1)
(3.9)
(8.3)
(11.6)
(8.7)
(9.9)
(1.2)
(0.1)
(0.3)
(0.5)
(0.6)
(1.2)
2015
2016
2017
2018
2019
2020
79
97
125
164
207
242
23%
29%
31%
26%
17%
65
85
99
133
176
194
82%
87%
79%
81%
85%
80%
36
42
45
66
87
109
46%
43%
36%
40%
42%
45%
(19.0)
(17.5)
(20.1)
(27.9)
(26.9)
(21.8)
(1.5)
(0.6)
(0.8)
(0.9)
(1.0)
(0.8)
Capital Expenditures
Change in Working Capital
Exhibit C
Exhibit D
05
Exhibit E
2015
2016
2017
2018
2019
2020
421
459
491
511
526
542
9%
7%
4%
3%
3%
Revenue Growth
Operating Expenses
278
303
324
337
347
358
As a % of revenue
66%
66%
66%
66%
66%
66%
EBITDA
177
193
206
214
221
228
EBITDA Margin
42%
42%
42%
42%
42%
42%
Capital Expenditures
(8.4)
(9.2)
(9.8)
(10.2)
(10.5)
(10.8)
(0.5)
(0.2)
(0.2)
(0.1)
(0.1)
(0.1)
EBITDA Multiple
EV Multiple
NPV Multiple
Deal 1
10.20x
0.90x
4.20x
Deal 2
10.30x
1.20x
3.80x
Deal 3
11.50x
1.60x
4.80x
Deal 4
20.50x
0.90x
5.70x
Deal 5
12.00x
1.50x
9.60x
06
Data Sheet
Additional Information
From 2011 to 2016, industry revenue declined at an annualized rate of 4.6% to
$25 billion. In 2016, revenue is expected to grow by 3.9%.
Demand from the Wireless Telecommunications Carriers industry is expected to
steadily rise, while demand from the Radio Broadcasting industry and Television
Broadcasting industry is also anticipated to somewhat increase over the next
five years. From 2016 to 2021, industry revenue is expected to recover at an
average annual rate of 1.6% to $2 7.1 billion.
The mobile phone market in the US has reached nearly saturation levels.
Smartphone penetration in the country is about 77.1%. Accordingly, mobile
phone subscription growth will be negatively impacted. As the wireless industry
continues to mature, future wireless growth will increasingly depend on the
carriers' ability to offer innovative data services to customers, which in turn,
will depend on the availability of additional spectrum.
The telecom sector in the United States is witnessing significant spectrum and
capacity constraints on the wireless network in certain markets. Such
constraints will limit the carriers' ability to increase and expand to additional
markets in the coming years. The impending saturation and unavailability of
spectrum will impact wireless growth prospects in the United States.
Customer demand for communication real estate could be adversely affected by
the emergence and growth of new technologies, which could make it possible
for wireless carriers to increase the capacity and efficiency of their existing
networks. The increased use of spectrally efficient technologies could
potentially reduce the demand for tower-based antenna space.
Additionally, certain complementary network technologies, such as femtocells
and wireless fidelity (Wi-Fi), could reduce the dependency on tower-based
networks and also reduce the need for carriers to add more equipment at
certain communications sites. In addition, any increase in the use of network
sharing, roaming, or resale arrangements by wireless service providers could
adversely affect customer demand for tower space.
Consolidation among wireless carriers could impact customer demand for the
communications sites, because the existing networks of wireless carriers often
overlap. In addition, if wireless carriers share their sites or permit equipment
location swapping on their sites with other carriers to a significant degree, it
could reduce demand for communications sites.
Consumers demand for broadband technologies and the speed at which they
shift to 4G technologies will influence capital expenditure on wireless
infrastructure beyond 2016. To effectively compete in a market for products
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08
Questions
Question 1: Given the current business/industry situation, what are the some
of the growth avenues that US Telco should look at and why?
Question 2: From the list of preliminary targets identified by US Telco, what
are the two most attractive targets and why?
Question 3: For the two targets identified, what buying price would you
recommend to US Telco?
Question 4a: What would be the key integration risks and considerations
that US Telco will have to consider to integrate successfully with your
chosen target?
Question 4b: Please provide recommendations that US Telco will have to
execute in the short term (30 days) and long term (180 days)
Note: Please state any assumptions you make very clearly
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