Overview of financing opportunities in the
TMT space in Asia
Amrish Kacker, Lim Chuan Wei
February 2010
Ref: 5445-66
2
Contents
Introduction
About Analysys Mason
Financing opportunities in the Asia–Pacific region
Our general methodology
Our due diligence expertise
Ref: 5445-66
3
Introduction




With the thawing of capital markets in the wake of the financial crisis, financing activity worldwide, including
in Asia, is widely expected to pick up in 2010
Within the TMT sectors, financing opportunities – both new and those postponed previously due to the
crisis – should emerge or resurface quickly in the immediate period
This brief presents Analysys Mason’s perspectives and insights into the financing opportunities for the TMT
sectors in Asia
The remainder of this document is structured as follows:




About Analysys Mason – a short introduction on who we are and what we do
Financing opportunities in the Asia–Pacific region – our views on what financing opportunities may be
available, why they would interest financial institutions, and which are the most attractive to pursue
Our general methodology – our analytical methods for supporting such opportunities
Our due diligence expertise – our capabilities and experience in transactional support and due
diligence
Ref: 5445-66
4
Introduction
About Analysys Mason
Financing opportunities in the Asia–Pacific region
Our general methodology
Our due diligence expertise
Ref: 5445-66
About Analysys Mason
5
Analysys Mason is the world’s premier adviser in
telecoms, IT and media
Global presence and experience
Integrated service offering
Strategy
Planning
Market
intelligence
Review
Implementation
Assignments completed
Analysys Mason office

Through our global presence, we deliver strategy advice, operations support and market intelligence to leading operators,
regulators, financial institutions, broadcasters, vendors and enterprises in over 80 countries

Our people have had a major influence on the industry for more than 20 years:

led the liberalisation of telecoms across Europe and Asia and mediated in policy issues for operators and regulators

supported several hundred transactions and licence acquisition processes for operators and financial institutions

provided strategic and operational support to major operators in the roll-out and expansion of businesses across the
sector, enhancing enterprise value
Ref: 5445-66
About Analysys Mason
6
Our consulting advice is valued across all sectors
Enterprise users
Public sector
In particular, we have provided
commercial and technical due
diligence services to financial
institutions and mobile and fixed
operators worldwide
Providing ICT and
procurement advice
for emergency
services and public
bodies
Mobile operators
Delivering value
through strategy
planning and
implementation
Helping to
maximise
returns from
investment in ICT
Regulators
Establishing and
implementing
policy frameworks
in telecoms
and media
markets
Media companies
Helping to
maximise revenue
in converging
markets
Financial
institutions
Supporting
vendors, sellers
and financiers
of industry
transactions
Fixed operators
Defining new
strategies,
optimising service
portfolios and
supporting policy
development
Ref: 5445-66
About Analysys Mason
7
Our success is built upon a deep and rigorous understanding
of key sector issues

Mobile


Impact of mobile broadband
WiMAX – threat or opportunity?
Revenue-maximising pricing propositions




Broadband



Regulation



Media



ICT infrastructure


Next-generation access strategies: FTTx
versus wireless
Wholesale product definition in NGNs
Strategies for fixed–mobile convergence

Capitalising on the digital dividend
Regulatory environments to deliver NGA
and NGN
TV regulation in a converging market

Content distribution strategies in a
converging market
Creation and distribution of ‘three-screen’
services
Maximising value of advertising inventory

ICT consolidation and cost optimisation
Service fulfilment and assurance
OSS/BSS legacy migration








RAN sharing and other cost reduction
strategies
OSS/BSS optimisation
Evaluating advertising opportunities
Value migration from infrastructure to
services and content
Efficient NGN procurement processes
OSS/BSS and customer support
Effective spectrum management
strategies
Licence allocation and acquisition
processes
Delivery of end-user experience
Regulation for a converged industry
Assessing the impact of media players
entering the telecoms market
OSS/BSS process optimisation
WAN acceleration
Construction, location and optimisation of
contact centres and control rooms
Ref: 5445-66
About Analysys Mason
8
We have an established track record of working with the
major financial institutions

Analysys Mason has undertaken over 100 due diligence assignments since 2002

We have undertaken a similar number of projects in support of vendor financing, M&A and private placements

We have worked with a wide range of operators, investment banks, private equity firms, strategic investors and governments
Selection of businesses on which we have undertaken due diligence
BTC, Bahamas (2009) • JTL, Kenya (2009) • Avea, Turkey (2008) • Aktel, Bangladesh (2008) • MTN, Africa (2008) • ONI, Portugal (2008)
PCCW, Hong Kong (2008) • Zain, Nigeria (2008) • Excelcomindo, Indonesia (2007) • Safaricom, Kenya (2007) • Lattelecom, Latvia (2007)
ONE, Austria (2007) • Camtel, Cameroon (2007) • MTC, Saudi Arabia (2007) • National Grid Wireless, UK (2007) • Vivatel, Bulgaria (2007)
TIM, Greece (2006) • Magticom, Georgia (2006) • Bite, Lithuania, Latvia (2006) • Armentel, Armenia (2006)
Selection of financial institutions that have chosen Analysys Mason for due diligence assignments
ABN AMRO • Apax Partners • Bank of Ireland • BBVA • BC Partners • BNP Paribas • Capital Partners • Carlyle • CDC Group Citigroup
Credit Suisse • Deutsche Bank • EBRD • Export Development Canada • Eurazeo • Finnvera • GE Capital • HSBC • ING • JP Morgan
Kohlberg Kravis Roberts • Lazard • Lloyds TSB Bank • NM Rothschild & Sons • The Royal Bank of Scotland Group • SACE
Société Générale • Standard Bank • TecCapital Investments • TD Bank Financial Group • UniCredit Banca Mobiliare
WestLB • World Bank Group
Selection of operators that have chosen Analysys Mason for due diligence assignments
Telkom South Africa • Telstra Europe • Zain Nigeria • Bahamas Telecommunications Company • Cable & Wireless UK • ONI Portugal
Mauritius Telecom • Reliance • National Grid • Safaricom • Etisalat • Vodafone Australia • Thus
Ref: 5445-66
About Analysys Mason
9
We have in-depth market experience in the Asia–Pacific
region to help financial institutions evaluate opportunities …
Project experience in the Asia–Pacific region by sector
Mobile
Broadband
Fixed
Media
Regulatory
ICT
East Asia
China & Mongolia
Japan & South Korea
Hong Kong & Macau
Taiwan
South Asia
India
Pakistan
Bangladesh
Sri Lanka
South-East Asia
Indonesia
Thailand
Cambodia, Laos & Vietnam
Philippines
Malaysia & Brunei
Singapore
Oceania
Australia
New Zealand
Company experience
Additional project experience of core Singapore team
Ref: 5445-66
About Analysys Mason
10
… having worked on a variety of projects across the region
Selected projects in the Asia–Pacific region
1
2
Development of a detailed cost accounting system
Estimation of revenue forecast in China for mobile broadband services
3
Comprehensive mobile LRIC cost study for a mobile operator, to calculate
termination
4
(a) Several studies for a mobile operator, including assessment of
telematics and FMC. (b) For a content player, devised an entry strategy
into the European market.
5
Review of strategic rationale for proposed merger between two operators
6
(a) Assessed a mobile operator’s business model to evaluate a 3G
opportunity. (b) Due diligence of integrated telecoms and media operator.
7
Due diligence of cellular operator
8
(a) Due diligence of an integrated wireline and wireless operator. (b)
Supported an integrated operator in growing its international voice
business.
9
Study of regulation and competition in the wireless local loop market
10
Business planning for WiMAX new entrant
11
A range of projects for a mobile operator, including business planning,
compensation negotiation and 3G licence support
12
(a) Evaluated the 3G opportunity and alternate business structures for a
mobile operator. (b) Mobile operator’s MVNO strategy and wholesale
pricing. (c) WiMAX business planning for new entrant
3
2
1
8
7
6
9
13
12
4
5
10
11
14
15
Assignments completed
16
13
(a) Pricing strategies for an incumbent operator.
(b) Due diligence of CDMA WLL operator / WiMAX licence holder
14
(a) Due diligence of a mobile operator. (b) Assessed strategic
options in infrastructure sharing / MVNOs for new 3G operator. (c)
WiMAX business plan for a new entrant
15
For Vodafone Australia, undertook a critical review of a bottom-up
mobile network cost model developed on behalf of the regulator.
16
Provided expert advice on the TSLRIC for both LLU and co-location
services.
Ref: 5445-66
11
Introduction
About Analysys Mason
Financing opportunities in the Asia–Pacific region
Our general methodology
Our due diligence expertise
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
12
Markets are recovering, and players in the TMT sectors
are looking to take advantage
Recovery trends in major Asia–Pacific stock indices
Shanghai Composite (2009)
Nikkei 225 (2009)
India BSE 30 (2009)
Straits Times Index (2009)
Ref: 5445-66
Source: Yahoo Finance
Financing opportunities in the Asia–Pacific region
13
Financing requirements will arise from network
deployments, M&A and new transmission platforms
Network deployments

Some operators in the region, particularly in emerging markets, are
undertaking network expansion and upgrades

As expanding or upgrading networks is capital intensive, operators will
be looking for financing to support these efforts
M&A

M&A activity is expected to pick up further in the next year, with various
opportunities in the TMT sectors across Asia

On the buy-side, PE firms and strategic investors will be seeking financing to
support their acquisitions
New transmission platforms

With some markets in the region on the verge of issuing 3G and/or
WiMAX licences, telecoms operators – both incumbents and new
players – will be looking for financing to back their forays into new
technologies

Some mobile/cable operators will look into fibre optic roll-out to
support additional revenue generation
With the pick-up in activity in
the TMT sectors, operators
will increasingly seek
financing to back new or
postponed projects
This likely increase in
demand for financing
presents opportunities for
commercial banks and other
financial institutions
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
14
Network deployment activity in the region will be driven by
network expansion, upgrades and greenfield deployment
China
India



Regional operators in India are
looking towards national expansion
…
… while impending 3G/WiMAX
licensing will trigger further
network deployment and upgrades
(est. USD2 billion)
Chinese operators are rolling out
3G networks after receiving their
licences, but funding support will
likely be tied up by Chinese banks
Regional

Some players in East and South
East Asia are exploring potential
regional WiMAX deployments
Vietnam
Bangladesh


3G and WiMAX licences are
expected to be issued in 2010,
which will trigger network
deployment (est. USD300 million)
Operators in Vietnam are just
beginning to roll out their 3G
networks with the recent issuance
of 3G licences in 2009
Thailand
Indonesia

Indonesian operators are pushing
forward with WiMAX deployment


3G and WiMAX licensing in
Thailand have stalled …
… but operators will be looking to
kickstart network deployment and
upgrades when and if the process
gets back on track (est. USD300
million)
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
15
M&A activity is widely expected to heat up in 2010
Effective M&A deal value in Asia-Pacific,
by quarter (USD billion)
180
160

With the thawing of capital markets in the second half of
2009, M&A activity has begun to pick up

There was reportedly a 32% increase in number of
worldwide M&A transactions in 4Q 2009

M&A activity is expected to continue heating up into 2010
156
155
Deal value (USD billion)
140
Quotations from industry
120
“The future looks encouraging for M&A with strong indicators in
the last quarter…we anticipate deal activity to increase in
2010…”
104
100
92
86
+30%
80
60
40
58
47
Neil Masterson, Global Managing Director of Investment Banking,
Thomson Reuters
61
“Global M&A activity would rise as much as 35% in 2010 as
improving economic conditions bolster dealmaking…”
Research firm Sanford C. Bernstein
20
0
"The relatively high volume of deals recorded in the fourth
quarter of 2009 hints at a resurgence of M&A activity for the new
year…"
Research firm Dealogic
Ref: 5445-66
Source: Thomson SDC, press releases, Analysys Mason
Financing opportunities in the Asia–Pacific region
16
The roll-out of new transmission platforms such as 3G,
WiMAX, and fibre will create a need for financing
3G



WiMAX
Markets such as India and Bangladesh
(and possibly Thailand) are on the verge
of licence issuance – financing support
will likely be required for bid
submissions as well as network roll-outs
In Vietnam, licences have recently been
issued, and operators will be looking for
more funding to build the network, as
well as to develop and market their 3G
services
Financing
requirements
driven by the
deployment of
new
transmission
platforms

Markets such as India and Bangladesh
(and possibly Thailand) are on the verge
of licence issuance – financing support
will likely be required for bid submissions
as well as network roll-outs

Existing WiMAX players in the region are
looking to expand their operations, both
domestically as well as regionally

In Indonesia and possibly Taiwan,
consolidation is expected between
WiMAX players
Other operators are looking to expand
their 3G networks
Fibre optic

Some operators in the region have embarked on fibre
optic roll-out of the core and/or access network

cable operators, for instance, are upgrading their
infrastructure to better compete

some mobile operators are investing in fibre to
enter the broadband space

mobile operators are also upgrading their
core/backbone infrastructure
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
17
In East Asia, the largest financing opportunities are likely
to be in China
Assessment of opportunities in East Asia
Market
1
Restructuring of PCCW
Hong Kong
2
Spin-off of handset manufacturing
operations of Huawei and/or ZTE
China
3
Acquisition of mobile VAS providers
China
4
Sale of Shaw Brothers’ stake in TVB
Hong Kong
5
Buyout of i-cable
Hong Kong
6
Buyout of ATV
Hong Kong
7
Buyout of Vibo Telecom
Taiwan
High
Possible funding
requirement
Opportunity
2
MEDIUM
HIGH
ATTRACTIVENESS
1
ATTRACTIVENESS
4
5
3
6
MEDIUM
7
ATTRACTIVENESS
Low
Low
High
Possibility
If you are interested in discusssing any of these opportunities further, please contact Amrish at
amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
18
The possible restructuring of PCCW remains an
opportunity to watch
What is happening?



PCCW has been exploring potential restructuring
options for sale of its assets, but has not been
successful
Most recently, PCCW dropped a privatisation bid in
April 2009 after regulators blocked the plan due to
allegations of shareholder manipulation
It remains possible that PCCW will renew such efforts
in the wake of a pick-up of activity in capital markets
How Analysys Mason can provide support

We are able to provide commercial and technical
pre-due diligence, and due diligence services in
support of this opportunity

These include:

review of the Hong Kong telecoms market

review of the competitive environment

review of business plan and potential risks

review of network assets

valuation of stake and identification of possible
downsides
Why this is of interest


A potential buyer looking to take a stake in PCCW
could seek financing support
Given the likely size of this deal, the financing
requirement could be substantial
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
19
In South Asia, the most compelling opportunities are in
India
Assessment of opportunities in South Asia
Opportunity
Market
1
National expansion of mobile operators
India
2
3G/WiMAX licence bid and roll-out
India
MEDIUM
HIGH
3
Merger/acquisition between Africa-Indian
operators
India
ATTRACTIVENESS
ATTRACTIVENESS
4
3G/WiMAX licence bid and roll-out
Bangladesh
5
Divestment of SingTel’s stake in PBTL
Bangladesh
3
Potential funding
requirement
High
21
4
5
MEDIUM
ATTRACTIVENESS
Low
Low
Possibility
High
If you are interested in discusssing any of these opportunities further, please contact Amrish at
amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
20
In South-East Asia, 3G and WiMAX deployments would
likely drive needs for financing support
Assessment of opportunities in South-East Asia
Market
1
Roll-out of 3G by mobile operators
Vietnam
2
Expansion of networks
Indonesia, Laos,
Cambodia,
Philippines
3
Regional WiMAX deployment
SEA region
4
Capitalisation of TRUE Move
Thailand
5
Capitalisation of Sun Cellular
Philippines
6
Acquisition/expansion of broadband
operations by mobile operators
Malaysia,
Philippines,
Singapore
7
WiMAX expansion in Indonesia
Indonesia
8
Buyout of Jasmine
Thailand
9
Buyout of u-mobile
Malaysia
10
Divestment of towers by incumbents
Thailand
11
Merger of Astro and Maxis
Malaysia
High
Potential funding
requirement
Opportunity
MEDIUM
HIGH
ATTRACTIVENESS
ATTRACTIVENESS
1
3
2
11
10
5
4
6
MEDIUM
8
Low
7
ATTRACTIVENESS
9
Low
Possibility
If you are interested in discusssing any of these opportunities further, please contact Amrish at
amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com
High
Ref: 5445-66
Financing opportunities in the Asia–Pacific region
21
Operators in Vietnam are now in the process of making
the transition to 3G
How Analysys Mason can provide support

We are able to provide commercial and technical
pre-due diligence, and due diligence services in support
of potential investments in Vietnam

These services include:
What is happening?

3G licences were issued in 2009, and all three
operators (Viettel, Vinaphone and Mobifone) are now
rolling out 3G networks and services
Why this is of interest

The roll-out of 3G networks and services means that
Vietnamese operators will be in need of capital to fund
their network and technology upgrade

review of the Vietnam mobile market

review of the Vietnam regulatory environment

review of the competitive environment

assessment of new entrant threat

review of the technology landscape, including 3G,
and implications for target


review of target’s business plan and potential
downsides, especially with 3G
valuation of target and review of bid
Ref: 5445-66
22
Introduction
About Analysys Mason
Financing opportunities in the Asia–Pacific region
Our general methodology
Our due diligence expertise
Ref: 5445-66
Our general methodology
23
Our focus has made us the adviser of choice for due
diligences of companies within the TMT sectors

Our assignments cover all sectors of the TMT market:


we have undertaken due diligence on numerous
mobile, fixed and cable network operators, carriers,
equipment vendors, broadcast operators, tower
companies and solutions providers

We have significant experience in working on both the
buy-side and sell-side of due diligence

We have a comprehensive knowledge of technologies,
networks and operations throughout the various
sub-sectors of the telecoms market
Fixed
Wireless
Cable
ISP
Carriers
Satellite
Application
Equipment
Virtual
Our structured methodology, supported by rigorous
research, ensures that:

we address all key issues, for example, crosschecking business model revenue forecasts with a
top-down, macroeconomic affordability analysis

we meet tight deadlines, and can deliver a red-flag
report two weeks into a project, to provide early
warning of any critical issues

Our broad international project experience and access to
in-house benchmarks, combined with proprietary tools
and proven techniques, provide a framework for robust
forecasting of key telecoms indicators, identifying and
assessing sensitivities, covenant setting and monitoring

We have in-house network design and operations
consultants who can provide:

high-level network designs to test network
capability and capex projections aligned with
business and market plans

the ability to deliver telecoms services on a timely
basis and to optimise the customer experience
while minimising opex and assuring revenue
Ref: 5445-66
Our general methodology
24
With our structured approach, we address all the
commercial and technical issues efficiently and robustly
Commercial
environment & strategy

Service portfolio

Pricing policy, risks and
price positioning



Marketing strategy:
subscriber acquisition,
distribution, advertising
Competitive landscape:




Regulatory
environment
profiling of
competitors
market shares and
new entrant
scenarios
fixed-line market
convergence and
substitution offers
Assessment of
opportunities and
threats


Recent and expected
developments in:

interconnect
regime

operator
licensing

spectrum
licensing

numbering

universal service

price controls
National regulator’s
activity and agenda,
dispute resolutions
Licences held and
specific obligations
Company revenues and
margins





Achievability of market
share in view of
commercial and
network strategy and
competitive landscape
Review of the
subscriber base
segmentation
Achievability of
revenue and pricing
Review of operations
and opex


Retention, acquisition
& marketing
expenses

Cost of services and
interconnection

Staffing levels versus
subscriber forecasts
and reorganisation
plans
Tariffs and structures,
in view of market
prices and affordability
Expected gross
margins: bottom-up
assessment and
benchmarking
OSS/BSS, network
management,
customer care and
enterprise IT

G&A and bad debt
expenses

Procurement and
quality assurance

Board, management,
agent and supplier
activities
Technology and capital
expenditure

Network capability and
technological roadmap

Capex breakdown and
timing of expenditure:

subscriber and
capacity forecasts

subscribers
geo-dispersion and
coverage

licence obligations

network service
strategy,
availability of
technology

Benchmarking of capex

Equipment allocation of
network expenditure
based on contract
prices versus estimates
Ref: 5445-66
Our general methodology
25
Analysys Mason can tailor its approach to the specific
needs of a due diligence

High-level red-flag report based on interviews and information
available from the data room

Short report focusing on key questions already identified during the
first phases

Review of management’s assumptions and key market and
profitability drivers

Full review of the management’s detailed operational plan

Development of company’s business plan





based on public information
integrating information from the data room
integrating inputs from other due diligence workstreams
(e.g, accounting, legal)
consistent with data from management interviews and with
the regulatory horizon
including sensitivities on key parameters highlighting critical
inputs

Comprehensive strategic review of the company going forward

Complementary and comprehensive technical due diligence report,
drawing on our expert technical and operations consultants

Due diligence documentation including bid book, information
memoranda, presentations to investors, market and business
models
Illustrative timeline of a due diligence
22-Feb
23-Feb
24-Feb
25-Feb
26-Feb
27-Feb
28-Feb
1-Mar
2-Mar
3-Mar
4-Mar
5-Mar
6-Mar
7-Mar
8-Mar
9-Mar
10-Mar
11-Mar
12-Mar
13-Mar
14-Mar
15-Mar
16-Mar
Potential deliverables
T F S SM TWT F S SMTWT F S SMTWT F
Due diligence
Management presentation
Data room
One-on-one
Site visits (on request)
<---------------
Submission deadline
Deliverables
Due diligence reports
Business plan validation
Preliminary valuation
Final Board presentation
Board meeting
Final documentation
Financing
Finalise financing case
Proposal to credit committee
Credit committee approval
<-----------
<----------<-----------
On-site presence
Indicative
range of
deliverables
Ref: 5445-66
Our general methodology
26
The objective of a technical due diligence is to identify
and mitigate investment risk in technology and operations

Technical due diligence provides a substantiated capex and opex position, highlighting and
quantifying potential risks and unrealised benefits to help develop a robust business plan

Telecommunications networks and operations require significant investment, up to the order of billions of
pounds

From a cost point of view, the business case for a telecommunications service, or portfolio of services, is
driven by network and operations capex and opex

Under-investment, or untimely investment, can lead to:

not being able to meet market demand

not being able to maximise revenue and profit

poor services, poor customer experience, high churn, a poor brand and, ultimately, low customer
acquisition/market share

Over-investment, or investment in sub-optimal technology, can lead to stranded assets, an inefficient
operation, and therefore an unprofitable business

When investing in telecommunications networks and operations, the investor must be confident that the
budgeted capex and opex is optimised to support the business and market plan
Ref: 5445-66
Our general methodology
27
Our process delivers key benefits that help ensure a
successful business plan

In particular, the benefits that we have identified, include:

ensuring that the network and operations can deliver the market plan from a capability, timing and
budget point of view

placing a focus on leveraging technical and operational synergies, and mitigating against future risk

optimising the value of major financial investment

clearly defining the required network/systems, operational strategy and technology roadmap

preventing stranded technical assets

clearly identifying material risk, and providing an appropriate actionable mitigation plan

financially quantifying material business risk

driving towards an efficient operation

developing a robust business case supported by realistic, optimised and benchmarked capex and
opex
Ref: 5445-66
Our general methodology
28
A rigorous methodology is key to delivering value, often
in short timescales and complex environments
High-level
review and
red-flag
report
Information
gathering

Issue request for
information (RFI)
document

Undertake
interviews of key
personnel


Visit and examine
key operational
sites
Walk through key
processes with
operational staff

High-level review
of key documents

Analysis of key
financial and
operational
benchmarks

Initial identification
of major risks to
be examined in
more detail,
potentially by all
parties in the due
diligence project
‘To be’
requirements
definition
‘As is’
review

Review and
document current
network, systems
and operations:

technology

design

dimensioning

processes

capex

opex

Driven by the
business and
market plan

Determine required
technology road
map to deliver
services


Determine network/
systems, high-level
design and
dimensioning
Determine required
capex and opex
budget
Gap analysis
and
recommendations

Determine
incremental
technology
strategy, network
and systems plan

Quantify
investment
required for current
business

Quantify
investment
required to meet
future network and
operations to
deliver market plan
A key challenge to delivering a due diligence project is obtaining the required information in a short period of time
As well as focusing on key documentation, if it is available, our highly experienced technical consultants are able
to ask critical questions, the answers to which have significant business impact
Ref: 5445-66
Our general methodology
29
We create value for clients through our independence,
in-depth experience and multi-disciplined consultants
Independence and experience


We are completely independent of
any equipment providers or other
professional service providers
We have successfully provided
advice to our clients for over 20
years

We have delivered hundreds of due
diligence and other related projects

We also provide technical and
operational strategy, network design
and procurement services, therefore
maintaining our best-in-class
network and operations knowledge
Multi-disciplined specialists

All of our consultants are TMT
specialists

We have significant experience in
many types of TMT businesses


We are able to review all layers
of the network and operations
from the physical infrastructure,
through the active layers,
BSS/OSS to the customer care
systems
Our consultants are very used to
working in multi-disciplined,
multi-party due diligence teams
Benchmark data

We are able to benchmark
equipment and application costs
gathered from many projects*

We are able to benchmark
financial investment ratios
against other business plans

We also procure networks on behalf
of clients, therefore providing us
with post-negotiated pricing and
technology roadmaps to ensure a
solid, realistically costed,
technology strategy

We also undertake organisational
and operational reviews providing
us with associated benchmark data
for efficient processes and
organisational structures
Ref: 5445-66
(*) This is done anonymously to maintain strict commercial confidentiality
30
Introduction
About Analysys Mason
Financing opportunities in the Asia–Pacific region
Our general methodology
Our due diligence expertise
Ref: 5445-66
Our due diligence expertise
31
We have extensive due diligence experience across Asia,
Africa and Europe
Europe
Asia
Albtelecom (2007)
AKTEL (2008)
Altice (2005)
Etisalat (2008)
Armentel (2006)
Excelcomindo (2007)
Astelit (2005)
PacketONE (2008)
Avea (2006)
PTCL (2005)
Baltkom (2007)
Sky Mobile (2007)
BITE (2007)
Swan Telecom (2008)
BSkyB (2008)
Africa
BTC (2007)
Cabovisao (2004)
Transaction support in Europe
Cesky Telecom (2002)
Cinven (2009)
Atlantique (2004)
Transaction support in Asia
Camtel (2007)
Transaction support in Africa
Cell C (2006)
Other Analysys Mason projects
Calyon (2009)
Eircom (2006)
EMKTV (2004)
Monaco Telecom (2004)
tele.ring (2005)
Libertis (2005)
Fastweb (2007)
NMT (2006)
Telekom Slovenije (2007)
Maroc Connect (2006)
Globul (2002)
Numericable (2006)
Telekom Srpkse (2004)
MTN (2007)
GTS (2007)
On Telecom (2006)
Thus (2005)
Multilinks (2007)
Lattelekom (2007)
ONE (2007)
Turk Telecom (2005)
Nitel (2005)
LycaTel (2009)
ONO/Auna (2005)
Voxtel (2004)
Safaricom (2007)
Magticom (2007)
RCS (2006)
VTH (2001)
Telecel de Loteny (2004)
Mobilkom (2004)
Starman (2007)
Zapp (2004)
Tunisie Telecom (2006)
Ref: 5445-66
Our due diligence expertise
32
We support debt and equity financing of the telecoms sector
Focus
Recent client successes
We have an extensive track record in telecoms finance,
undertaking rigorous, structured due diligence and
business planning in support of vendors, purchasers and
lenders. We are the partner of choice for many leading
investors and debt financiers
We have provided IPO support in respect of:
Our extensive portfolio of work spans Europe, Asia,
Africa, Middle East and the Americas
We continue to support investors in wireline, wireless,
facilities and media-based businesses
Skill set

Technical and commercial due diligence on behalf of
purchasers and debt financiers

Vendor due diligence

Covenant setting and monitoring

Preparation of information memoranda

Valuation in support of M&A

Joint-venture structuring

Safaricom

Zain, Saudi Arabia (2008)
We have supported the following M&As:

Lattelekom (2007)

ONE, Austria (2007)

Casema, Netherlands

Mobilkom, Bulgaria (2004)

Excelmindo, Indonesia (2007)

Monaco Telecom (2004)
We have supported the privatisations of:

Telekom Slovenia (2007)

Camtel, Cameroon (2007)

BTC (2007)

Tunisie Telecom (2006)

Nitel, Nigeria (2005)

Türk Telecom (2005)
We have provided lender due diligence in support of:

Etisalat, Egypt (2007)

Zain, Saudi Arabia (2007)
Ref: 5445-66
Our due diligence expertise
33
We support operators/vendors in fulfilling M&A opportunities …
Focus
Skill set
We undertake work focusing on support for large-scale,
operator-centric transactions (typically USD billions)

Buy- and sell-side support

Transaction management and negotiation support

Synergy appraisals

Valuation
In addition, we apply of our robust methodologies, detailed
knowledge of relevant markets and value chains to support
M&A/equity financing of SIs, OSS/BSS vendors and application
developers, with transaction values typically in the range of
USD10 million to 100 million
… and support operators with ‘fast-close’ financial reporting
Focus
We apply robust methodologies to support the world’s leading
telecoms operators in their financial reporting, bringing particular
expertise to support requirements
Our ability to work to extremely tight timetables enables our
clients to meet their challenging reporting requirements
Skill set

IFRS3 purchase price allocation:

fair value appraisal of tangible assets

fair value appraisal of intangible assets

Value in use appraisals and asset impairment
reviews

Valuation of options

IFRIC12 concession accounting
Ref: 5445-66
Our due diligence expertise
34
Selection of our due diligence work in Asia [1/3]
Project focus
Client
What we achieved
Due diligence for acquisition
Regional operator
Commercial and technical due diligence of a mobile operator in Sri Lanka. This
involved analysis of primary data, third-party data and face-to-face interviews with
management in order to support an assessment of the value of the target operator to
our client. Our work highlighted the risks and opportunities of the potential acquisition
and produced a detailed ten-year business plan, which was used as the primary input
to the discounted cash flow valuation. As a result, our client decided to submit an offer
for the target operator, and is currently in the negotiation phase of the acquisition
Due diligence for acquisition
Private company
For a company looking to acquire a new entrant broadband operator in China, we
provided a thorough review of the key issues involved in the investment, and an initial
valuation of the deal. This included a detailed review of the broadband market potential
in China, including market forecasts, a review of the technology involved, a detailed
analysis of the competitive landscape, and advice on the potential regulatory issues
involved
Due diligence for investment
Private equity firm
We supported a private equity firm during the due diligence process of a major
integrated (fixed, mobile and pay-TV) operator in South-East Asia. This involved
attending management presentations and site visits. We carried out a detailed review
of the management’s forecasts for each of the areas of the business and supported the
client’s financial advisers in the development of a revised case for valuation
Due diligence for merger
Private equity firm
For a private equity firm, we carried out a red-flag review of the strategic rationale and
potential synergies for the proposed merger of a two operators in South-East Asia.
During the project, we examined the potential revenue upsides that the combined
entity may benefit from through bundling of services, cross-selling and the introduction
of new products with reference to international case studies. We also commented on
cost synergies that may be generated through the deal
Due diligence for acquisition
Investment bank
Due diligence for a minority stake in a South-East Asian mobile operator. This involved
management meetings and site visits. We performed a detailed analysis of the market
considering issues such as the threat of CDMA fixed wireless access operators, likely
market consolidation and subscriber price-usage elasticity. We developed a business
model that was used to support the client's financial advisers in the valuation process
Ref: 5445-66
Our due diligence expertise
35
Selection of our due diligence work in Asia [2/3]
Project focus
Client
What we achieved
Due diligence for investment
WiMAX operator
We provided an external evaluation of a WiMAX business plan that an operator had
developed for a new market opportunity in a South-East Asian country. The client used
our evaluation to refine the business plan and inform the decision of whether or not to
pursue the investment opportunity
Due diligence for acquisition
Regional operator
We conducted a commercial due diligence for a client interested in acquiring a minority
stake in a South-East Asian mobile operator. This involved management meetings and
site visits. We performed a detailed analysis of the market considering issues such as
the threat of CDMA fixed wireless access operators, likely market consolidation and
subscriber price-usage elasticity. We developed a business model that was used to
support the client's financial advisers in the valuation process
Due diligence for financing
Commercial bank
We assessed the competitive position of a submarine cable operator in Asia. We
compiled detailed profiles of the operator’s major competitors, including assessment of
their relative strengths and weaknesses. In addition, we identified major market trends,
and conducted an analysis of the drivers of change in the Asian submarine cable
market in the medium term
Due diligence for acquisition
Investment bank
Due diligence of an incumbent telecoms operator in a developing Asian country.
Analysys Mason assessed the market potential of the target, its current operations and
its business plan. We carried out a valuation of the stake that was being offered for
sale by the government
Due diligence for acquisition
Asset management
group seeking to
invest in India
We assessed the business plan of a convergent service provider. The project reviewed
the key assumptions used in the business plan and provided the client with an
indicative valuation of the business. We drew on our international expertise and
experience in assessing the opportunity of the data centre business, and our analysis
helped the client in understanding the business and key drivers of the business
Due diligence for stock exchange
regulation
Stock exchange
Production of valuation certificate for an Asian wireless local loop operator. Working
with a investment bank, we produced a comprehensive discounted cash flow model
and filed our assumptions and opinion with the exchange authorities
Ref: 5445-66
Our due diligence expertise
36
Selection of our due diligence work in Asia [3/3]
Project focus
Client
What we achieved
Due diligence for investment
Private equity firm
We supported a private equity group in a high-level review of the business model for a
South Asian CDMA WLL operator. The operator was competing in a rapidly growing
mobile market and was focusing on delivering fixed services. The review highlighted
the opportunities and risks to the business
Due diligence for investment
Venture capital
company
We supported a venture capital company in undertaking a high-level commercial due
diligence of a South Asian WLL and national long-distance operator. Our project
assessed the development of the market with a particular focus on the role of
WLL-based versus GSM-based mobility. We also assessed the regulatory
environment to evaluate the mobility options that the WLL licence provided. Based on
the results of our project, the client entered into a more detailed due diligence exercise
Ref: 5445-66
Our due diligence expertise
37
Selection of our experience undertaking due diligences of
major mobile operators [1/3]
Project focus
Client
What we achieved
Due diligence for acquisition
Investment bank
We developed a business plan for the valuation of a mobile operator in a Baltic state
on the behalf of a Western Europe investment bank. Our cash flow model helped to
inform our client’s decision on the acquisition of the target. Our work was praised for its
consistency and timely delivery
Due diligence for acquisition
Fixed operator
We helped a Nigerian fixed operator to acquire a fixed and mobile licence by bidding
for an operator in sub-Saharan Africa. We co-ordinated inputs from in-house experts
and developed a common, but detailed, view on the market, company revenues, and
costs of services over the full length of the licence (15 years) owned by the target. Our
client used our model to inform its valuation of the target and develop the best possible
strategy for the company in preliminary negotiations with a potential bidding partner
with strategic interests
Due diligence for financing
Financial institution
On behalf of the leading arranger of a large debt facility, we carried out a due diligence
of a new mobile entrant in the Middle East. In addition to reviewing in detail the market
context and the company’s operations, we carried out a thorough due diligence of the
company’s business plans, developed a revised banking case and conducted
sensitivity analysis. We presented our findings to a panel of more than 70 bankers
during the loan syndication phase of the transaction and provided support in answering
questions from potential financiers. We also presented our findings to a credit agency
responsible for guaranteeing vendor financing. Our client succeeded in raising the debt
funding it required
Due diligence for financing
Mobile operator
Due diligence assignment on an African mobile operator as part of a refinancing
process. We undertook a detailed review of the company’s business plan, examining
the evolution of both revenues and costs, and involved on-site visit. Our work
highlighted some key risks at a critical time in the evolution of the competitive
environment and quantified additional upsides. We developed a revised investment
case for our client, which used our report to support its investment decision
Ref: 5445-66
Our due diligence expertise
38
Selection of our experience undertaking due diligences of
major mobile operators [2/3]
Project focus
Client
What we achieved
Due diligence for financing
Consortium of banks
We acted as market consultant of the lenders and global co-ordinators to the
re-financing of a Turkish mobile operator. We assessed the operator’s revised
business plan, reviewing the main assumptions and expressed our overall opinion of
the plan. Subsequently, we supported the lenders in considering the implications for a
lenders’ base case and associated sensitivities
Due diligence for acquisition
Mobile operator
We supported an operator in its bid for a minority stake in a South-East Asian mobile
operator. This involved management meetings and site visits. We performed a detailed
analysis of the market and the target company preparing a full technical and
commercial due diligence report. We developed a detailed business model that was
used to support the client's financial advisers in the valuation process
Due diligence for merger
Consortium of banks
We carried out a due diligence on the merger of two mobile operators, with a
transaction value in excess of USD1 billion. We reviewed the business plan,
interviewed the senior management and recommended a number of modifications to
the plan. We also supported the lenders during the development of the lenders' case
and facilitated key financing meetings between the company, its shareholders and the
lenders
Due diligence for financing
Consortium of banks
Due diligence on an Eastern European mobile operator for a consortium of North
American and European lenders in support of a transaction in excess of USD100
million. We undertook a detailed assessment of the operator's marketing strategy,
network technology, business plan and management team. Our work led to several
major revisions being made to the operator's business model and financing structure
Due diligence for acquisition
Investment bank
We undertook a due diligence of a Scandinavian CDMA 450 operator, on behalf of an
investment bank. Our work included an assessment of the company’s strategy,
marketing plan, operations strategy and business model (revenue and cost
projections). The results of the study were used by our client to develop the financial
projections for its lenders case
Ref: 5445-66
Our due diligence expertise
39
Selection of our experience undertaking due diligences of
major mobile operators [3/3]
Project focus
Client
What we achieved
Due diligence for acquisition
Investment bank
We performed a market and technical due diligence of both the fixed and mobile
operations of a European operator, conducting interviews with the management team
and undertaking physical network inspections. We reviewed the business plan
assumptions on revenues, direct costs, operating expenditure and capital expenditure
in light of the company’s current position and expected commercial and regulatory
developments in the telecoms sector
Due diligence for financing
Investment bank
Support to an investment bank in the financing of an African mobile operator for its
initial launch. We carried out a due diligence of the plan and of the overall strategy of
the operator. We also prepared a business plan which was benchmarked against other
plans
Due diligence for acquisition
Investment bank
Due diligence of an international mobile operator with several operations in Western
Africa. For each operation, we reviewed the market, regulatory and technical
background, and examined benchmarks of similar operations in comparable countries
to provide an opinion on the reasonableness of the business plans under review for
each market
Due diligence for financing
Commercial bank
A due diligence in support of a syndicated loan transaction of a mobile operator in the
Middle East. We reviewed the company's plans for network expansion and developed
a view on the market to assess the potential demand for advanced mobile services in
the country, taking into account technology, customer preference and economic
conditions
Due diligence for financing
Investment bank and
government export
credit group
Due diligence for a multi-billion-dollar financing. We assessed the potential demand for
mobile services, taking into account subscriber affordability, technology deployment,
the prevailing regulatory environment and in-country economic conditions. We
reviewed planned network deployment costs to assess whether the plan had allocated
sufficient capital for investments, and the capacity and quality of the network. We
reviewed the key business processes to ensure that they supported the planned
business strategy. From this analysis we identified the key risks to the plan and
quantified the impact of these risks
Ref: 5445-66
Our due diligence expertise
40
Selection of our wireless infrastructure projects and due
diligence assignments [1/2]
Project focus
Client
Mobile tower business
Infrastructure company For a French highway company, we analysed its business of renting sites and towers
What we achieved
to telecoms operators, and recommended a new tariff policy. The project also advised
on the negotiation of existing contracts with mobile operators
Mobile tower business: commercial
due diligence
Private equity firm
We supported a private equity buyer in developing a bid for a spin-off of a diverse
business consisting of broadcasting/mobile towers and media services. The project
involved building a detailed independent business model which required an
understanding of the key changes in the market including DTT switch-over, evolution
of requirements for mobile towers. Based on our business model, our client developed
a valuation for the business
Mobile tower business: commercial
due diligence
Consortium of
investors
We assisted investors in evaluating a mobile tower business in Europe. Following our
initial development of market and financial models, we were retained to value a
specific acquisition opportunity in southern Europe and to support negotiations during
the formation of a bidding consortium. Our staff worked on site with the client's staff to
maximise flexibility and speed of response
Technical due diligence of tower
company
Private equity firm
We provided an independent view of the vendor’s capability to deliver its stated
business plan. This involved reviewing the physical assets, people and processes, as
well as the forecast capex and opex needed to support the business
Due diligence mobile sites
Investment bank
We undertook a review of the business plan, market conditions and potential of a UK
mobile site provider
Ref: 5445-66
Our due diligence expertise
41
Selection of our wireless infrastructure projects and due
diligence assignments [2/2]
Project focus
Client
What we achieved
Cell site acquisition
Private equity firm
We conducted a focused review of a cell site acquisition company’s business plan. The
review placed particular emphasis on the key uncertainties in the plan and served to
confirm the business plan’s assumptions
Mobile infrastructure market review
Private equity firm
We provided a high-level review of the market opportunity for mobile infrastructure
provision in a number of European markets. The size of the market opportunity was
assessed, and the revenue model associated with the infrastructure provider
opportunity explored
Assessment of investment
opportunities in mobile
infrastructure
Investment bank
We analysed the conditions for investment in mobile communications infrastructure in
an East Asian country. This information was then extrapolated to the country in
question. The client was then able to advise potential investors on opportunities for
investment
Mobile network outsourcing
Equipment investor
We conducted a focused review of the requirements for mobile network outsourcing in
Europe. The review placed particular emphasis upon the capabilities that would be
required to ensure that the outsourcing services business would prove credible in the
marketplace
Ref: 5445-66
Our due diligence expertise
42
Selection of due diligences of major fixed, integrated,
backbone and broadband operators [1/2]
Project focus
Client
What we achieved
Internal due diligence
Network operator
Cable & Wireless (C&W) UK wished to invest in a next-generation network, and
required an internal business case to be developed for approval by the C&W Board.
We conducted an independent technical due diligence on the internally developed
investment case and ratified the high-level NGN architecture and technology roadmap
and migration plan. The C&W Board approved the GBP200 million investment in
C&W’s NGN
Due diligence for acquisition
Fixed operator
We undertook the market and technical due diligence of the fixed and mobile networks
of the Nigerian incumbent Nitel on behalf of a large network operator. Indications of the
expected value of the sale were in excess of USD1 billion. Based on our
identification of significant technical and operational risks, our client decided not to
invest in Nitel, and has since invested in an alternative operator
Due diligence for financing
Consortium of
investment banks
For a consortium of European investment banks, we reviewed the strategy and
business plan of a fibre-based carriers’ carrier. We examined the company’s strategy,
interviewed key management, and reviewed the planned revenues and costs. The final
report formed an important input to the consortium’s financing decision
Due diligence for acquisition
Investment bank
A due diligence investigation of a WLL and DSL operator in Germany. The project
assessed the market opportunity for the company in voice, Internet and leased line
services, in the context of the competitive environment faced by the company in its
target regions. We delivered an analysis of the major issues in the company's business
plan and prepared a revised base case plan
Due diligence for acquisition
Private equity fund
specialising in
emerging markets
Due diligence on the incumbent fixed and mobile operator in a South Asian country.
The work included a detailed assessment of the market environment, including
competitor interviews, a technical assessment of the network and an in-depth appraisal
of the company’s business plans
Ref: 5445-66
Our due diligence expertise
43
Selection of due diligences of major fixed, integrated,
backbone and broadband operators [2/2]
Project focus
Client
What we achieved
Due diligence for acquisition
Private equity fund
We supported Babcock & Brown Capital Management in their successful acquisition of
eircom. During this process, we performed a market and technical due diligence of
both the fixed and mobile operations, conducting interviews with the management
team and undertaking physical network inspections. We reviewed the business plan
assumptions on revenues, direct costs, operating expenditure and capital expenditure
in light of the company's current position and expected commercial and regulatory
developments in the Irish telecoms sector
Due diligence for financing
Consortium of
investment banks
Due diligence on a fixed operator in Central and Eastern Europe as a part of a
EUR350 million debt refinancing. This involved an assessment of the market including
size, growth opportunities, regulation and competition, as well as an investigation into
the costs allocated in the plan and whether these were sufficient
Due diligence for financing
Financial institution
We supported a financial institution in evaluating the funding application by a recently
established fixed wireless access (FWA) operator in Nigeria and its future business
potential. We evaluated the radio, transmission and core networks and associated
performance, and then developed a five-year expansion plan, delivering both capacity
and coverage enhancement requirements. We also created a five-year technical
roll-out plan based on current traffic analysis and projected growth, and a five-year
investment plan. Our work resulted in approved funding for the operator
Ref: 5445-66
44
Amrish Kacker
Lim Chuan Wei
amrish.kacker@analysysmason.com
lim.chuan.wei@analysysmason.com
Analysys Mason Pte Ltd
8 Temasek Boulevard
Penthouse Level
Suntec Tower Three
Singapore 038988
Tel: +65 6866 3203
Fax: + 65 6866 3838
www.analysysmason.com
Ref: 5445-66