one of the largest cable operators in the U.S., prepared to acquire the AirThread. Connections (ATC), a large regional cellular provider. Although this acquisition. By early , Zimmerman was considering the possibility of acquiring AirThread Connections, one of the largest wireless companies in the United States. This case can be used as a capstone valuation exercise for first-year MBA students in an introductory finance course. A senior associate in the business.

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Valuation of AirThread Connections conncetions By clicking “Send”, you agree to our terms of service and privacy policy.

In addition, the handwriting was on the wall in terms of service offering convergence. Erik Stafford and Joel L. There are occasional references to actual companies in the narration. About the Author Erik Stafford. On the other hand, there was also a well-established school of thought that believed large profitable firms with the ability to go public should not trade at a discount due to their status as airthrread companies.

The wider debate is about how and when certain valuation methodologies should be employed. Copying or posting is an infringement of copyright.

In addition, the company also believed that its experience as an acquirer had allowed it to develop unique operational know-how in the area of merger integration. Wider debate The case includes two interesting characters conjections Zimmerman and Zhang, but contention among the characters is not the primary aim of the case.

AirThread Connections Case

System Operating Expenses As seen in Table 3, compared with its primary rivals, AirThread had lower operating and EBITDA margins, which largely reflected the previously discussed competitive disadvantages. This case, though based on real events, is fictionalized, and any resemblance to actual persons or entities is coincidental.

Fictionalised The case is a fictionalised account of true events. Log In Sign Up. Do 2 Total consolidated markets are markets for connection the company has operating licenses but may not provide service. To order copies or request permission to reproduce materials, callwrite Harvard Business Publishing, Boston, MAor go to http: Cite View Details Purchase.


American Cable currently offered video, internet, and landline telephony, but did not have any kind of wireless offerings. Conncetions Stafford and Joel L. Remember me on this computer. Exhibit 2 According to the casebook, conmections reinvestment rate is defined as capital expenditures plus investments in working capital minus depreciation divided by net operating profit after taxes, and the ROC return on capital is defined as net operating profit after taxes divided by the book value of equity plus debt.

Juliane Begenau and Erik Stafford.

Valuation of AirThread Connections Essay Example for Free

In order to move wireless traffic from a cell tower to a central switching office required either leasing telephone lines from the local carrier or investing in very expensive rP microwave transmission equipment, which was oftentimes technically difficult to employ due to line of site requirements. First, when we calculate the operating value, we use the DCF model.

Valuation of AirThread Connections Share this page: The cash flows of these five years combine the stand-alone cash flows and the synergy cash flows.

The smaller companies would eventually be weeded out tC through industry consolidation. Finance questions Finance questions Connectionns Athletic. View a full list of featured cases. In addition, students analyze the effects of non-operating assets on valuation. Zimmerman had a lot on his plate. Based on the projected cash flow information provided conmections the case, what is the stand- alone value of AirThread? The debt payment schedule is presented in Ex 6.

Juliane Begenau and Erik Stafford We decompose bank activities into passive and active components and evaluate the performance of the active components of the bank business model by controlling for passive maturity transformation strategies that can be executed in the capital market. Second, the acquisition could help both companies expand into the business market. But there were considerable risks too. Click here to sign up.


Jurek and Erik Stafford.

All fields Reference no. This discount is primarily related to the illiquidity of private investments, but also connectoins certain types of agency costs as well as the financial health and size of the firm.

We assume the equity as the average equity of the industry, which is 0. Valuation of AirThread Connections.

Go to advanced search. We assume the negative growth rate in is abnormal, so we remove this rate from our calculation. The goal was to use a tax-efficient structure that maximizes investor returns by minimizing the amount of up-front equity invested in the deal.

Rev is based on equipment revenue.

Valuation of AirThread Connections

Consequently, average revenue per minute decreased from 6. Operating markets are markets for which the company provides service. AirThread competed directly with anywhere from three to five major competitors in each of its markets. For example, Accounts Receivable Those networks are expected to be able to deliver not only wireless telephony but also internet service with throughput similar to that which is currently offered by cable providers.

The smaller companies would eventually be weeded out connnections industry consolidation. We’ll occasionally send you account related and promo emails. This publication may not be digitized, photocopied, or otherwise reproduced, posted, or transmitted, without the permission of Harvard Business School. We will write a custom sample essay on Valuation of AirThread Connections specifically for you.

As a result, American Cable became an aggressive acquirer.