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Ref: 5445-66 Overview of upcoming M&A opportunities in the TMT space in Asia Amrish Kacker, Lim Chuan Wei February 2010.

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Presentation on theme: "Ref: 5445-66 Overview of upcoming M&A opportunities in the TMT space in Asia Amrish Kacker, Lim Chuan Wei February 2010."— Presentation transcript:

1 Ref: Overview of upcoming M&A opportunities in the TMT space in Asia Amrish Kacker, Lim Chuan Wei February 2010

2 2 Ref: Contents Introduction About Analysys Mason M&A opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

3 3 Ref: Introduction With the thawing of capital markets in the wake of the financial crisis, M&A activity worldwide, including in Asia, is expected to pick up in 2010 Within the TMT sectors, M&A opportunities – both new and those postponed previously due to the crisis – should emerge or resurface quickly in the immediate period This brief presents Analysys Masons perspectives and insights into the M&A opportunities for the TMT sectors in Asia The remainder of this document is structured as follows: w About Analysys Mason – a short introduction on who we are and what we do w M&A opportunities in the Asia–Pacific region – our views on what M&A opportunities may be available, why they would interest financial institutions, and which are the most attractive to pursue w Our general methodology – our analytical methods for supporting such opportunities w Our due diligence expertise – our capabilities and experience in transactional support and due diligence

4 4 Ref: Introduction About Analysys Mason M&A opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

5 5 Ref: Analysys Mason is the worlds premier adviser in telecoms, IT and media Analysys Mason office Assignments completed Market intelligence Strategy Planning Implementation Review 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: w led the liberalisation of telecoms across Europe and Asia and mediated in policy issues for operators and regulators w supported several hundred transactions and licence acquisition processes for operators and financial institutions w provided strategic and operational support to major operators in the roll-out and expansion of businesses across the sector, enhancing enterprise value Global presence and experienceIntegrated service offering About Analysys Mason

6 6 Ref: Our consulting advice is valued across all sectors Enterprise users Helping to maximise returns from investment in ICT Financial institutions Supporting vendors, sellers and financiers of industry transactions Publicsector Providing ICT and procurement advice for emergency services and public bodies Mobile operators Delivering value through strategy planning and implementation Fixed operators Defining new strategies, optimising service portfolios and supporting policy development Media companies Helping to maximise revenue in converging markets Regulators Establishing and implementing policy frameworks in telecoms and media markets In particular, we have provided commercial and technical due diligence services to financial institutions and mobile and fixed operators worldwide About Analysys Mason

7 7 Ref: Our success is built upon a deep and rigorous understanding of key sector issues 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 Mobile Broadband ICT infrastructure Regulation Impact of mobile broadband WiMAX – threat or opportunity? Revenue-maximising pricing propositions Content distribution strategies in a converging market Creation and distribution of three-screen services Maximising value of advertising inventory Media Delivery of end-user experience Regulation for a converged industry Assessing the impact of media players entering the telecoms market Next-generation access strategies: FTTx versus wireless Wholesale product definition in NGNs Strategies for fixed–mobile convergence Value migration from infrastructure to services and content Efficient NGN procurement processes OSS/BSS and customer support Capitalising on the digital dividend Regulatory environments to deliver NGA and NGN TV regulation in a converging market Effective spectrum management strategies Licence allocation and acquisition processes OSS/BSS process optimisation WAN acceleration Construction, location and optimisation of contact centres and control rooms About Analysys Mason

8 8 Ref: 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 About Analysys Mason

9 9 Ref: We have in-depth market experience in the Asia–Pacific region to help financial institutions evaluate opportunities … MobileBroadbandFixedMediaRegulatoryICT 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 experienceAdditional project experience of core Singapore team Project experience in the Asia–Pacific region by sector About Analysys Mason

10 10 Ref: … having worked on a variety of projects across the region Development of a detailed cost accounting system Estimation of revenue forecast in China for mobile broadband services Comprehensive mobile LRIC cost study for a mobile operator, to calculate termination (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. Review of strategic rationale for proposed merger between two operators (a) Assessed a mobile operators business model to evaluate a 3G opportunity. (b) Due diligence of integrated telecoms and media operator. Due diligence of cellular operator (a) Due diligence of an integrated wireline and wireless operator. (b) Supported an integrated operator in growing its international voice business. Study of regulation and competition in the wireless local loop market Business planning for WiMAX new entrant A range of projects for a mobile operator, including business planning, compensation negotiation and 3G licence support (a) Evaluated the 3G opportunity and alternate business structures for a mobile operator. (b) Mobile operators MVNO strategy and wholesale pricing. (c) WiMAX business planning for new entrant 10 (a) Pricing strategies for an incumbent operator. (b) Due diligence of CDMA WLL operator / WiMAX licence holder (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 For Vodafone Australia, undertook a critical review of a bottom-up mobile network cost model developed on behalf of the regulator. Provided expert advice on the TSLRIC for both LLU and co-location services Assignments completed Selected projects in the Asia–Pacific region About Analysys Mason

11 11 Ref: Introduction About Analysys Mason M&A opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

12 12 Ref: M&A activity is widely expected to heat up in 2010 Effective M&A deal value in Asia-Pacific, by quarter (USD billion) 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 The future looks encouraging for M&A with strong indicators in the last quarter…we anticipate deal activity to increase in 2010… Neil Masterson, Global Managing Director of Investment Banking, Thomson Reuters Global M&A activity would rise as much as 35% in 2010 as improving economic conditions bolster dealmaking… Research firm Sanford C. Bernstein "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 Quotations from industry Q 20071Q 20082Q 20083Q 20084Q 20081Q 20092Q 20093Q 2009 Deal value (USD billion) +30% Source: Thomson SDC, press releases, Analysys Mason M&A opportunities in the Asia–Pacific region

13 13 Ref: Current macro-trends in the TMT sectors, in particular, present opportunities for M&A Maturing markets In some markets, especially developed ones, the telecoms industry has reached substantial maturity Operators in these markets tend to have relatively stable cash-flows, low debt, and are in possession of significant assets, making them potentially attractive LBO targets Industry consolidation In more fragmented sectors and across sectors, there is a move towards consolidation, e.g.: w fragmented telecom markets w between telcos and media players w between fixed and mobile operators w between telcos and ICT players New technologies Technological trends present further opportunities for M&A activity, as operators make strategic shifts in response Key trends include: w WiMAX w IPTV w fixed-mobile convergence Opportunities for M&A M&A opportunities in the Asia–Pacific region

14 14 Ref: At a regional level, there are several trends further fuelling M&A activity M&A opportunities in the Asia–Pacific region Regional operators are consolidating down the value chain in enterprise services Some technologies have the potential for a regional play Some telcos are moving into the ICT space to better serve enterprise clients These players have sought acquisitions of system integrators, software/application companies and other service providers down the value chain to bridge capability gaps and provide end-to-end solutions WiMAX is being explored as a regional proposition for wireless broadband in parts of Asia DTH players have gone regional in the Middle East, and can potentially do so in Asia (barring regulatory issues) Operators are seeking greater cost economies by regionalising network outsourcing, call centres Regional operators continue to be a source of M&A activity in emerging markets Operators with multi-market presence are consolidating their cost centres (e.g. network operations, customer service operations) These efforts are helping to drive regional ambitions Regional operators such as NTT, SingTel, Axiata, etc. continue to be amongst the more visible players in the M&A space, as they pursue investment opportunities in emerging markets within Asia Other regional players from outside the Asia–Pacific (e.g. Etisalat) are seeking to increase their presence in Asia

15 15 Ref: We see a number of market-specific opportunities requiring financing, and potentially an equity injection M&A opportunities in the Asia–Pacific region South Asia Indias mobile market remains fragmented and poised for further consolidation… …particularly with the onset of 3G and opportunities for national expansion Players in Bangladesh are still seeking external funding support South-East Asia Consolidation is expected in Indonesias mobile sector In Thailand, operators are preparing to push more strongly into data services In Singapore and Malaysia, operators are making forays into convergence In Vietnam, there is strong interest for foreign investment in the mobile space East Asia China has entered into 3G, and operators are consolidating their presence in the content/VAS space In Hong Kong, there is potential for restructuring plays in the telecoms and media sectors Fragmented subsectors in Taiwan and Korea are likely to see more consolidation, though this might be marginal Oceania Government pressure on Telstra for restructuring opens the possibility of a divestment of its fixed and broadband assets

16 16 Ref: In East Asia, some opportunities are more interesting than others Assessment of opportunities in East Asia OpportunityMarket Restructuring of PCCWHong Kong Spin-off of handset manufacturing operations of Huawei and/or ZTE China Consolidation and/or acquisition of mobile VAS providers China Sale of Shaw Brothers stake in TVBHong Kong Buyout of i-cableHong Kong Buyout of ATVHong Kong Buyout of Vibo TelecomTaiwan Marginal consolidation of cable operatorsTaiwan Consolidation of pay TV operatorsKorea Possibility LowHigh Low Potential value High HIGH ATTRACTIVENESS MEDIUM ATTRACTIVENESS MEDIUM ATTRACTIVENESS If you are interested in discusssing any of these opportunities further, please contact Amrish at or Chuan Wei at M&A opportunities in the Asia–Pacific region

17 17 Ref: 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 Why this is of interest A deal could present an opportunity for the acquisition of a stake in PCCW PCCW could be an attractive target, given its: w stable revenue and cash flow w potentially higher valuation through cost-cutting measures or management change 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: w review of the Hong Kong telecoms market w review of the competitive environment w review of business plan and growth prospects w review of network assets w review of potential synergies between fixed, mobile and pay-TV assets w valuation of stake and review of bid M&A opportunities in the Asia–Pacific region

18 18 Ref: In South Asia, the most compelling opportunities are in India Assessment of opportunities in South Asia OpportunityMarket Consolidation/ regional expansion of mobile operators in India India Consolidation of towersIndia Merger/acquisition between Africa-Indian operators India Consolidation of cable / satellite TV broadcasters India Divestment of SingTels stake in PBTLBangladesh Possibility LowHigh Low Potential value High HIGH ATTRACTIVENESS MEDIUM ATTRACTIVENESS MEDIUM ATTRACTIVENESS M&A opportunities in the Asia–Pacific region If you are interested in discusssing any of these opportunities further, please contact Amrish at or Chuan Wei at

19 19 Ref: Growing consolidation activity in the tower market in India should be of interest What is happening? As demand for towers grows in tandem with the mobile market in India, medium-sized tower companies are embarking on a consolidation spree to accelerate roll-outs and compete more effectively w in January 2009, Tata Teleservices entered into a joint tower venture with Quippo after selling a 49% stake of its tower arm w in March 2009, American Tower Corp acquired Indian tower firm Xcel Telecom Why this is of interest Increasingly, tower companies will be looking actively for partners to fund their expansion There could also be short-term opportunities from acquiring still-undervalued tower companies that could be targets for acquisition by other companies 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 acquisitions in the tower market These services include: w review of the Indian telecoms market and its implications for tower demand w review of the Indian regulatory environment w review of the competitive environment w review of the technology landscape and implications for target w benchmarking of best practices in tower mergers w review of targets business plan, growth prospects and opportunities w valuation of target and review of bid M&A opportunities in the Asia–Pacific region

20 20 Ref: In South-East Asia, the main opportunities stem from operators looking externally for capital injection Assessment of opportunities in South-East Asia OpportunityMarket Strategic investment into TRUE MoveThailand Privatisation of mobile operatorsVietnam Consolidation of towersIndonesia Strategic investment into Sun CellularPhilippines WiMAX consolidation in IndonesiaIndonesia Acquisition/expansion of broadband operations by mobile operators Malaysia, Philippines, Singapore Consolidation of pay TV operatorsIndonesia Consolidation of mobile operatorsIndonesia Buyout of JasmineThailand Buyout of u-mobileMalaysia Consolidation of alternative pay-TV operatorsThailand Merger of Astro and MaxisMalaysia Divestment of towers by incumbentsThailand Possibility LowHigh Low Potential value High HIGH ATTRACTIVENESS MEDIUM ATTRACTIVENESS MEDIUM ATTRACTIVENESS M&A opportunities in the Asia–Pacific region If you are interested in discusssing any of these opportunities further, please contact Amrish at or Chuan Wei at 8 7

21 21 Ref: There is strong interest for greater foreign investment into Vietnams mobile sector, especially with privatisation What is happening? All three of Vietnams major mobile operators (Viettel, Vinaphone and Mobifone) are still state-owned In 2005, the Vietnam government approved the privatisation of Vinaphone and Mobifone, but this has yet to happen, even though several foreign operators have expressed interest 3G licences were issued in 2009, and all three operators are now rolling out 3G services Why this is of interest The liberalisation of the mobile sector presents opportunities for foreign investors to take a stake in the growing Vietnam mobile market, in which each major operator holds approximately a one-third share The roll-out of 3G networks and services means that Vietnamese operators will be in need of capital and 3G-related expertise more so than ever 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: w review of the Vietnam mobile market w review of the Vietnam regulatory environment w review of the competitive environment w assessment of new entrant threat w review of the technology landscape, including 3G, and implications for target w review of targets business plan and growth prospects, especially with 3G w valuation of target and review of bid M&A opportunities in the Asia–Pacific region

22 22 Ref: Introduction About Analysys Mason M&A opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

23 23 Ref: 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 w 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 Our structured methodology, supported by rigorous research, ensures that: w we address all key issues, for example, cross- checking business model revenue forecasts with a top-down, macroeconomic affordability analysis w 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: w high-level network designs to test network capability and capex projections aligned with business and market plans w the ability to deliver telecoms services on a timely basis and to optimise the customer experience while minimising opex and assuring revenue FixedWirelessCable CarriersISP Application Satellite EquipmentVirtual Our general methodology

24 24 Ref: With our structured approach, we address all the commercial and technical issues efficiently and robustly Commercial environment & strategy Regulatory environment Company revenues and margins Review of operations and opex Technology and capital expenditure Service portfolio Pricing policy, risks and price positioning Marketing strategy: subscriber acquisition, distribution, advertising Competitive landscape: w profiling of competitors w market shares and new entrant scenarios w fixed-line market convergence and substitution offers Assessment of opportunities and threats Recent and expected developments in: w interconnect regime w operator licensing w spectrum licensing w numbering w universal service w price controls National regulators activity and agenda, dispute resolutions Licences held and specific obligations 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 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 Retention, acquisition & marketing expenses Cost of services and interconnection Staffing levels versus subscriber forecasts and reorganisation plans G&A and bad debt expenses Procurement and quality assurance Board, management, agent and supplier activities Network capability and technological roadmap Capex breakdown and timing of expenditure: w subscriber and capacity forecasts w subscribers geo-dispersion and coverage w licence obligations w network service strategy, availability of technology Benchmarking of capex Equipment allocation of network expenditure based on contract prices versus estimates Our general methodology

25 25 Ref: Analysys Mason can tailor its approach to the specific needs of a due diligence Potential deliverables 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 managements assumptions and key market and profitability drivers Full review of the managements detailed operational plan Development of companys business plan w based on public information w integrating information from the data room w integrating inputs from other due diligence workstreams (e.g, accounting, legal) w consistent with data from management interviews and with the regulatory horizon w 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 Our general methodology

26 26 Ref: Our commercial due diligence approach systematically identifies the opportunities and threats to a business … Commercial due diligence approach Review of market environment Review of regulatory environment Review of competitive environment Review of business plan and financial model What is the current and anticipated market growth? What are the key growth drivers and opportunities? Are there peripheral or adjacent markets that are relevant? What are potential risks to the market? What are the key regulatory issues and their implications for the business? Are there any anticipated developments? Who are the key players in the regulatory environment? How well is the business positioned to address regulatory issues? What is the distribution of market share? Who are the key competitors for the business and what is their threat? Are new entrants expected? What is the relative positioning of the different players, and what are the opportunities? What are the revenue projections? Are they reasonable? What are the opex and capex projections? Are they reasonable? What is the current valuation of the business? Is it over- or under-valued? Focus Key questions Our general methodology

27 27 Ref: … while our technical due diligence identifies and addresses 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: w not being able to meet market demand w not being able to maximise revenue and profit w 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 Our general methodology

28 28 Ref: Our technical due diligence process delivers key benefits that help ensure a successful business plan In particular, the benefits that we have identified in previous projects include: w ensuring that the network and operations can deliver the market plan from a capability, timing and budget point of view w placing a focus on leveraging technical and operational synergies, and mitigating against future risk w optimising the value of major financial investment w clearly defining the required network/systems, operational strategy and technology roadmap w preventing stranded technical assets w clearly identifying material risk, and providing an appropriate actionable mitigation plan w financially quantifying material business risk w driving towards an efficient operation w developing a robust business case supported by realistic, optimised and benchmarked capex and opex Our general methodology

29 29 Ref: A rigorous methodology is key to delivering value, often in short timescales and complex environments 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 Review and document current network, systems and operations: w technology w design w dimensioning w processes w capex w 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 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 Information gathering High-level review and red-flag report As is review To be requirements definition Gap analysis and recommendations 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 Our general methodology

30 30 Ref: We create value for clients through our independence, in-depth experience and multi-disciplined consultants Our general methodology (*) This is done anonymously to maintain strict commercial confidentiality Independence and experienceMulti-disciplined specialistsBenchmark data 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 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 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

31 31 Ref: Introduction About Analysys Mason M&A opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

32 32 Ref: Transaction support in Africa Other Analysys Mason projects Starman (2007) NMT (2006) tele.ring (2005) RCS (2006) ONO/Auna (2005) ONE (2007) On Telecom (2006) Numericable (2006) VTH (2001) Zapp (2004) Voxtel (2004) Turk Telecom (2005) Tunisie Telecom (2006) Thus (2005) Telekom Srpkse (2004) Telekom Slovenije (2007) Mobilkom (2004) Europe Eircom (2006) Monaco Telecom (2004) LycaTel (2009) Lattelekom (2007) GTS (2007) Globul (2002) Fastweb (2007) EMKTV (2004) Cinven (2009) Cesky Telecom (2002) Cabovisao (2004) BTC (2007) BSkyB (2008) BITE (2007) Baltkom (2007) Avea (2006) Astelit (2005) Armentel (2006) Altice (2005) Albtelecom (2007) Asia Swan Telecom (2008) Sky Mobile (2007) PTCL (2005) PacketONE (2008) Excelcomindo (2007) Etisalat (2008) AKTEL (2008) Calyon (2009) Africa Telecel de Loteny (2004) Safaricom (2007) Nitel (2005) Multilinks (2007) MTN (2007) Maroc Connect (2006) Magticom (2007) Libertis (2005) Cell C (2006) Camtel (2007) Atlantique (2004) Transaction support in Asia Transaction support in Europe We have extensive due diligence experience across Asia, Africa and Europe Our due diligence expertise

33 33 Ref: We support debt and equity financing of the telecoms sector Our due diligence expertise Recent client successes We have provided IPO support in respect of: w Safaricom w Zain, Saudi Arabia (2008) We have supported the following M&As: w Lattelekom (2007) w ONE, Austria (2007) w Casema, Netherlands w Mobilkom, Bulgaria (2004) w Excelmindo, Indonesia (2007) w Monaco Telecom (2004) We have supported the privatisations of: w Telekom Slovenia (2007) w Camtel, Cameroon (2007) w BTC (2007) w Tunisie Telecom (2006) w Nitel, Nigeria (2005) w Türk Telecom (2005) We have provided lender due diligence in support of: w Etisalat, Egypt (2007) w Zain, Saudi Arabia (2007) Focus 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 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

34 34 Ref: We support operators/vendors in fulfilling M&A opportunities … … and support operators with fast-close financial reporting Our due diligence expertise Focus Skill set We undertake work focusing on support for large-scale, operator-centric transactions (typically USD billions) 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 Buy- and sell-side support Transaction management and negotiation support Synergy appraisals Valuation Focus Skill set We apply robust methodologies to support the worlds 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 IFRS3 purchase price allocation: w fair value appraisal of tangible assets w fair value appraisal of intangible assets Value in use appraisals and asset impairment reviews Valuation of options IFRIC12 concession accounting

35 35 Ref: Project focus ClientWhat we achieved Due diligence for acquisitionRegional 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 acquisitionPrivate 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 investmentPrivate 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 managements forecasts for each of the areas of the business and supported the clients financial advisers in the development of a revised case for valuation Due diligence for mergerPrivate 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 acquisitionInvestment 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 Our due diligence expertise Selection of our due diligence work in Asia [1/3]

36 36 Ref: Selection of our due diligence work in Asia [2/3] Project focus ClientWhat 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 operators 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 acquisitionInvestment 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 acquisitionAsset 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 Our due diligence expertise

37 37 Ref: Selection of our due diligence work in Asia [3/3] Project focus ClientWhat we achieved Due diligence for investmentPrivate 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 investmentVenture 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 Our due diligence expertise

38 38 Ref: Selection of our experience undertaking due diligences of major mobile operators [1/3] Project focus ClientWhat we achieved Due diligence for acquisitionInvestment 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 clients decision on the acquisition of the target. Our work was praised for its consistency and timely delivery Due diligence for acquisitionFixed 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 companys operations, we carried out a thorough due diligence of the companys 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 companys 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 Our due diligence expertise

39 39 Ref: Selection of our experience undertaking due diligences of major mobile operators [2/3] Project focus ClientWhat we achieved Due diligence for financingConsortium 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 operators 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 acquisitionMobile 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 mergerConsortium 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 companys 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 Our due diligence expertise

40 40 Ref: Selection of our experience undertaking due diligences of major mobile operators [3/3] Project focus ClientWhat we achieved Due diligence for acquisitionInvestment 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 companys current position and expected commercial and regulatory developments in the telecoms sector Due diligence for financingInvestment 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 acquisitionInvestment 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 financingInvestment 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 Our due diligence expertise

41 41 Ref: Selection of our wireless infrastructure projects and due diligence assignments [1/2] Project focus ClientWhat we achieved Mobile tower businessInfrastructure company For a French highway company, we analysed its business of renting sites and towers 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 vendors 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 sitesInvestment bank We undertook a review of the business plan, market conditions and potential of a UK mobile site provider Our due diligence expertise

42 42 Ref: Selection of our wireless infrastructure projects and due diligence assignments [2/2] Project focus ClientWhat we achieved Cell site acquisitionPrivate equity firm We conducted a focused review of a cell site acquisition companys business plan. The review placed particular emphasis on the key uncertainties in the plan and served to confirm the business plans 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 outsourcingEquipment 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 Our due diligence expertise

43 43 Ref: Selection of due diligences of major fixed, integrated, backbone and broadband operators [1/2] Project focus ClientWhat we achieved Internal due diligenceNetwork 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&Ws NGN Due diligence for acquisitionFixed 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 financingConsortium 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 companys strategy, interviewed key management, and reviewed the planned revenues and costs. The final report formed an important input to the consortiums 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 acquisitionPrivate 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 companys business plans Our due diligence expertise

44 44 Ref: Selection of due diligences of major fixed, integrated, backbone and broadband operators [2/2] Project focus ClientWhat we achieved Due diligence for acquisitionPrivate 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 financingConsortium 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 financingFinancial 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 Our due diligence expertise

45 45 Ref: Analysys Mason Pte Ltd 8 Temasek Boulevard Penthouse Level Suntec Tower Three Singapore Tel: Fax: Amrish Kacker Lim Chuan Wei


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