Private equity — seeing below the surface.
In the voice centric era buying a stake in a
mobile operator used to be a relatively risk free and predictable
way of making sustainable gains on the invested capital. Since the uptake
of mobile broadband, however, the short and mid-term returns are far from
certain.
In the short term, the increased capital and OPEX intensity of the emerging data business can be compensated by trimming general fixed costs and e.g. by slowing down capital investments into new geographical coverage areas. But what happens, when there is no more "fat" to trim and the cost of adding capacity will start pumping up CAPEX/sales, and eroding earnings and free cash flow?
During the due diligence phase of the acquisition, we help the buyers to understand the sustainability of the target operator's business plan by undertaking a focused due diligence exercise to appraise the scalability of the operator's network platforms and "gigabyte readiness" of their infrastructure supply and support contracts.
Apart from due diligences we also help investors in reviewing or developing business plans for entering new markets.
In the short term, the increased capital and OPEX intensity of the emerging data business can be compensated by trimming general fixed costs and e.g. by slowing down capital investments into new geographical coverage areas. But what happens, when there is no more "fat" to trim and the cost of adding capacity will start pumping up CAPEX/sales, and eroding earnings and free cash flow?
During the due diligence phase of the acquisition, we help the buyers to understand the sustainability of the target operator's business plan by undertaking a focused due diligence exercise to appraise the scalability of the operator's network platforms and "gigabyte readiness" of their infrastructure supply and support contracts.
Apart from due diligences we also help investors in reviewing or developing business plans for entering new markets.
