Case Study- Maverick

Deloitte
Made By
Team Captain: Snehal Gandhe
Team Members: Arshee Ajmani
Nainsi Sahu

Introduction

This case is about US Telco Ltd. a real estate investment trust company. The main area of business of this company is to lease space on
the communication sites to wireless service providers like radio and television broadcast company, etc. The company has its major
presence in the United States.

Apart from leasing, the company want to expand in service segment in other regions and provide customized co-location solutions that
would increase the speed of network.

To expand the company is looking for various options. One of the option is Merger and Acquisition.

Index
Question 1- Page 3
Question 2- Page 4
Question 3- Page 5
Question 4a- Page 6
Question 4b- Page 7

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: Given the current

Answer: Growth prospectus:
Due to increase in technology, the wireless networks will grow in the market. Hence adopting the wireless technology will be a good
decision.
By 2016, the consumers will shift to 4Gconnection. The mobile market has reached its saturation point and future wireless growth
depends on the innovative data services to be offered to customers.
Providing customized co-location solutions to the existing customers, to increase the speed of network deployment.

Question 2: From the list of preliminary targets identified by US Telco, what are the two most attractive targets and why?

Answer: The two most attractive targets:

ASA Towers, Inc. (Argentina, South America)

ASA Towers is one of the two target companies because of the following reasons:
(1) The GDP of the place is second highest among other options, which makes it a good place for investment. Also, it shows a
good percentage of telecom penetration. The competition is low which makes it fit for survival.
(2) ASA Towers provide various services which involves renting and leasing of antenna and tower, and space for
telecommunication companies. The company also works in the wireless and internet sector which will contribute to the future of the
industry.
(3) As the company was incorporated in2012, it is in its initial stage. And, according to the exhibit, future prospect of the company
shows that it will soon start its growth stage and start earning good profit.
(4) The EBITDA multiplier is high. Also, the EV multiplier is promising.

BBA Africa Limited (Namibia, Africa)

BBA Africa is the other target company because:

(1) The GDP of Namibia is the highest among all other options, making it a good place to invest money. High percentage of
telecom penetration shows a good market place. The competition is 50%, but the company is well established as it was
incorporated in 2000 and the place has low regulations.
(2) The key operations of working are renting and leasing antenna and tower and providing 3G, internet and mobile services to the
consumers. With the shift to the 4G network, the company might provide a good base to enter in the new market.
(3) The revenue is rising and EBITDA is high. The company has good share in capital expenditure.
(4) The EBITDA and NPV multipliers are good.

Question 3: For the two targets identified, what buying price would you recommend to US Telco?

Answer: The price will be paid twice of the revenue.

To ASA Towers, Inc. we will pay $24 millions. At a decent price a good company has been bought.

$158 millions will be paid to BBA Africa Limited . The amount invested has to be carefully managed

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?

Answer: Risk and consideration :

ASA Towers, Inc. : The risk associated with this company is that there are initial losses. The investment is done in a company which is at
its initial stage. The antenna will soon be replaced by wireless technology, which might harm the company's working.

BBA Africa Limited : The mobile market is at its saturation which means that soon the market might fall. The company is mainly dealing in
the business of leasing antennas and providing various mobile services, which might soon be replaced by wireless connections and 4G
network.

Question 4b: Please provide recommendations that US Telco will have to execute in the short term (30 days) and long term (180 days)

Short term:
For short term it is recommended to increase spectrum and capacity to remove the constraints of the carriers and enhance the wireless
connection.

Long term:
For long term it is recommended to set up a 4G network with BBA and remove antennas and towers from the existing sites and install
new wireless network technology to stand prepared for the upcoming change in the market.