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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Do 2 Connnections consolidated markets are markets for connectinos the company has operating licenses but may not provide service. The potential synergies come from system operating cost saving as well as the increase in revenue and gross profit.
Valuation of AirThread op Given the potential importance and complexity of a possible AirThread acquisition, Zimmerman decided to tap Jennifer Zhang, an up-and-coming senior associate from the University of Chicago, to conduct the initial valuation of AirThread.
Hold-to-maturity accounting of portfolio net asset value eliminates the majority of measured risk. Show the cash flow forecasts, discount rate, and your valuation model.
Valuation of AirThread Connections Essay
Zhang decided to use the comparable company information contained in Exhibit 7. Finally, because most businesses required reliable high-speed internet and landline telephony service, the recent trend toward bundled services had, airhtread a large extent, frozen ATC out of the op business market.
Zhang believed that the combined company would be able to attract business customers now that wireless, wire line, and internet service could be offered by the same provider. Moreover, she also knew the cost savings would be gradual. In addition, students analyze the effects of non-operating assets on valuation. Operating Results As a starting point, Jennifer decided to create a base case using historical operating results as a guide, and then create an upside case that considered possible synergies.
The reasons above make us believe that the synergy is positive aigthread the acquisition is a good idea. The authors Erik Stafford and Joel L. Additionally, American Cable saw a looming competitive threat from advanced wireless networks based on the In addition, the handwriting was on the wall in terms of service offering convergence.
As discussed earlier, the wireless communications market was extremely competitive, connectiona to a large extent it had been commoditized. In fact, some had argued that the company needed to find a suitor before its market position became untenable. First, American Cable Communication ACC and AirThread could help each other compete connevtions the industry that was moving more and more bundled service offerings.
Over the period —, we find that 1 unlevered bank assets underperform passive portfolios of maturity-matched U.
AirThread Connections Case
Treasury bonds; 2 the cost of bank deposits exceeds the cost of bank connectionns 3 bank equities have CAPM betas near one, while passive maturity transformation strategies have CAPM betas near zero; and 4 portfolios of bank equities consistently underperform portfolios designed to passively mimic their economic exposures. Second, the acquisition could help both companies expand into the business market.
Further, she wanted to keep things simple by assuming a stock purchase using the maximum amount of leverage available. The case is a fictionalised account of true events. Hi there, would you like to get such a paper? If you contact us after hours, we’ll get back to you in 24 hours or less.
Register Submit to us Case writing resources Case writing scholarships How to submit connectjons case Online case submission Why submit your case to us? The estimated revenue and gross profit for new wireless subscribers is shown in Table 5.
This makes for a challenging and comprehensive case which also mirrors real-world financial analysis and modelling. In addition, AirThread had an extensive set of roaming agreements with other carriers to provide its customers with coverage in areas where the company did not operate a network.
But there were considerable risks too. We assume that after the acquisition, the constant growth rate will increase to 2. Finance Globalization Health Care.
Gains Losses on Investments Zhang contemplated her new assignment, she decided to take a methodical step-by-step approach to the valuation by focusing on projecting the operating results, estimating the appropriate cost of capital and quantifying the potential synergies that might result from combining the two companies. Business and Environment Business History Entrepreneurship.
We are very pleased to receive this award as it means that we are being acknowledged as having made a pedagogical contribution in the area connwctions financial case method. Technology and Operations Management.
Equity in Earnings of Affiliates In order to effectively airtgread and retain customers, the firm had to offer superior customer yo service and aggressive pricing packages in terms of monthly service fees and equipment subsidies.