Company Profile

Telecommunications company with approximately $100 million in revenues.


Expanding into new markets in a heavily regulated industry where only a few service providers exist. A company must have a license to provide service.

Approach & Result

The company desired to expand its footprint (service market area) into a contiguous metropolitan area on a major interstate. The license was held by another carrier, but they had not yet begun to provide service. I was charged with the task of determining the value of this opportunity.

How does one go about valuing a market like this? There were no assets, only the right to be able to provide service.
I gathered as much industry information as possible and began to construct a financial model that was thorough, detailed, and complete with income statement, balance sheet, and statement of cash flows. The model also had to be flexible enough to accommodate any changes in assumptions.

Next, we developed a list of assumptions relative to this market such as:
1. Population
2. Economics of this market
3. Penetration rate (how many customers could we expect to add each month?)
4. Churn rate (how many customers would we expect to lose each month?)
5. Customer Acquisition Costs (CAC). This included everything from the lease on stores, staffing, management, compensation, loss on equipment sales, etc.
6. Capital expenditures to deploy the towers and equipment necessary to provide the service.
7. Monthly costs to provide the service from an engineering and technical perspective.
8. Growth rate over a period of time.
9. Discount rate to measure risk and bring the value of the series of cash flows back to present time.


I determined the value of that market to be about $35 million.  The owners wanted a second opinion to see if my value was accurate, so they hired an investment banking firm with a team of financial  analysts to check my work. After a few weeks of validating all of my assumptions and cash flows, their response was, “Yep, this is a good number.”

The business owners acquired that market and still provide service there to this day.