Analysis of WIMAX/BWA Licensing in India: A real option approach

Indian Internet and broadband market has experienced very slow growth and limited penetration till now. The introduction of Broadband Wireless Access (BWA) is expected to aid in increasing the penetration of internet and broadband in India. The report sheds light on the guidelines and procedure used in 4G/BWA spectrum auction and presents comparative analysis of the competing technologies, providing the information about suitability of each technology available. Recently held 4G/ BWA spectrum auction saw enthusiastic participation by the industry and even saw some new entrants in Indian broadband market. Government benefited by Rs, 385bn that it earned as revenue from the auction of the spectrum and projected it as successful auction. However, the question remains if the auctions were efficient and whether they led to creation of value or will it prove to be burden to the telecom operators and will depress their balance sheet for years to come. The report uses both traditional valuation methods such as Discounted Cash Flow as well as Real Option approach to answer such questions. Using DCF analysis, the broadband subscribers have been forecasted to grow from present 13.77mn to 544mn by the end of 2025. The wireless subscribers are forecasted to be 70% of the total broadband subscribers after 5 years of roll out as it will be difficult to replace all wireline subscribers with wireless subscribers in India due to the high cost of wireless broadband and new technology. WiMAX is expected to increase its presence with time and reach 90mn subscribers from meager 0.35mn subscribers by 2025. Using industry wide cost of capital as 12.05%, the Net Present Value has been found Rs 221bn aggregate with an IRR of 17.1%. Using Real option approach, the value of license has been calculated as Rs 437bn which is 13.5% more than the spectrum fees paid by the operators. This mismatch, between the auction value and the correct value that should have been discovered by supply-demand dynamics, can be due to limited participants in BWA spectrum auctions and companies such as TATA and Reliance opting out of the auction process midway as well as uncertainty about acceptance of new technology with Indian subscribers.WiMAX, broadband, 3G spectrum, 4G,broadband wireless access, valuation, licensing, real option

"Looking behind the veil": invisible corporate intangibles, stories, structure and the contextual information content of disclosure

Purpose – This paper aims to use a grounded theory approach to reveal that corporate private disclosure content has structure and this is critical in making "invisible" intangibles in corporate value creation visible to capital market participants. Design/methodology/approach – A grounded theory approach is used to develop novel empirical patterns concerning the nature of corporate disclosure content in the form of narrative. This is further developed using literature of value creation and of narrative. Findings – Structure to content is based on common underlying value creation and narrative structures, and the use of similar categories of corporate intangibles in corporate disclosure cases. It is also based on common change or response qualities of the value creation story as well as persistence in telling the core value creation story. The disclosure is a source of information per se and also creates an informed context for capital market participants to interpret the meaning of new events in a more informed way. Research limitations/implications – These insights into the structure of private disclosure content are different to the views of relevant information content implied in public disclosure means such as in financial reports or in the demands of stock exchanges for "material" or price sensitive information. They are also different to conventional academic concepts of (capital market) value relevance. Practical implications – This analysis further develops the grounded theory insights into disclosure content and could help improve new disclosure guidance by regulators. Originality/value – The insights create many new opportunities for developing theory and enhancing public disclosure content. The paper illustrates this potential by exploring new ways of measuring the value relevance of this novel form of contextual information and associated benchmarks. This connects value creation narrative to a conventional value relevance view and could stimulate new types of market event studies

Simulation discounted cash flow valuation for internet companies

Discounted cash flow (DCF) is the most accepted approach for company valuation. It is well grounded in theory and practice. However, the DCF approach, which is commonly used for traditional companies valuation, presents a number of serious weaknesses within the Internet companies’ context. One of these weaknesses is tackling the uncertainty that characterize future cash flows of these companies. Specifically DCF assumes that future cash flow streams are highly predictable. The effects of uncertainty are therefore tackled implicitly by discounting the expected value of the cash flows at a risk-adjusted interest rate. However, under uncertainty, future cash flows of these companies can no longer be characterized by a single value but rather by a range of values of its possible consequences. This paper looks at the way in which uncertainty can be incorporated into the traditional DCF approach so that the latter, which is otherwise conceptually sound, becomes relevant. This is done by recognizing that the DCF input variables are uncertain and will have a probability distribution pertaining to each of them. Thus by utilizing a probability-based valuation model (using Monte Carlo Simulation) it is possible to incorporate uncertainty into the analysis and address the shortcomings of the current model. The MC simulation assigns a range of values in order to cope with uncertainty underlies each key cash flow variable. The process leads to a probability distribution of the valuation criterion used, giving investors a quantitative measure of risk involved

“Corporate restructuring issues under the holding company structure – The NTT Case in Japan”

ABSTRACT This research paper focused on the corporate restructuring of Nippon Telegraph Telecommunication (NTT Group) under the pure holding company structure in 1999 and its implications. In order to understand the holding company structure, we introduced the concept of "internal capital markets" and explained its application within the framework of NTT Group. Next, we gave an account of the background events leading to NTT Group's corporate restructuring in order to understand the reason for choosing and keeping the holding company structure. Our research methodologies include interviews with NTT Group's management and data from public sources. Finally, to analyze the effect of the holding company structure to NTT Group, we conducted a hypothetical valuation analysis using the free cash flow model. Comparing the market value of NTT Group with our valuation results, it appeared that the market has undervalued NTT Group. We concluded our report with some suggestions on how NTT Group might be able to increase their market value.HOLDING COMPANY STRUCTURE, RESTRUCTURING, INTERNAL CAPITAL MARKET, VALUATION

The Need of Changes in Traditional Accounting Systems Necessitated by Modern Intellectual Capital Conception

While economists, business people and policy analysts continue to debate the question of what is "new" about the so-called "New Economy", globalization, urgency of innovation and intensive use of Information technology, one important feature of modern Corporation in the early twenty-first century seems clear: intangible factors are playing an increasingly dominant role in business wealth creation. The drivers of tomorrow's wealth are brands, networks, knowledge, innovation, relationships, competencies, corporate culture and leadership, and these are the new critical assets - the weightless keys to business future wealth. But despite the growing awareness of the importance of intangible assets, they remain almost universally ignored in traditional accounting and reporting procedures. The authors in this article analyze the main problems concerning difficulties to reflect intangibles in traditional accounting statements and project the tendencies of reporting intangible-related information in future accountability.Podczas gdy ekonomiści, przedsiębiorcy i politolodzy dyskutują nad tym, co jest "nowego" w tzw. Nowej Ekonomii oraz nad zagadnieniami związanymi z globalizacją i potrzebą innowacji oraz szerokiego korzystania z technologii informatycznej, jedna kwestia nie ulega wątpliwości, jeśli chodzi o zmiany w przedsiębiorstwie XXI w.: czynniki niematerialne odgrywają coraz większą rolę w tworzeniu wartości. Czynniki kluczowe w kreowaniu przyszłego bogactwa to znaki firmowe, systemy połączeń i kooperacji, wiedza, innowacje, relacje, wartości, kultura organizacyjna i przywództwo. Ale chociaż świadomość znaczenia aktywów niematerialnych i prawnych jest coraz większa, tradycyjna rachunkowość i sprawozdawczość niemal całkowicie je ignoruje. Autorzy tego artykułu analizują najważniejsze problemy, wynikające z trudności odzwierciedlenia aktywów niematerialnych w tradycyjnych sprawozdaniach finansowych oraz ukazują kierunki przyszłego rozwoju rachunkowości w tym zakresie.Nepaisant augančio nematerialaus turto svarbos suvokimo, daugelyje šalių jis iślieka ignoruojamas tradicineje atskaitomybeje ir ataskaitų procedūrose. Praktiškai visos nematerialios investicijos finansinese ataskaitose yra fiksuojamos kaip iślaidos, bet ne kapitahzuojamos (traktuojamos kaip turtas), ir nuamortizuojamos prognozuojamame naudos laikotarpyje. Materialaus-nematerialaus turto asimetnja stingant informacijos apie investicijas į nematerialų turtą daro socialinę ir ekonominę żalą. Sio straipsnio autoriai analizuoja pagrindines nematerialaus turto atspindejimo tradicinese finansinese ataskaitose sunkumų problemas, pasiūlydami jų sprendimo būdus ir prognozuodami informacijos apie nematerialų turtą fiksavimo ateitį atskaitomybėse.Zadanie pt. Digitalizacja i udostępnienie w Cyfrowym Repozytorium Uniwersytetu Łódzkiego kolekcji czasopism naukowych wydawanych przez Uniwersytet Łódzki nr 885/P-DUN/2014 zostało dofinansowane ze środków MNiSW w ramach działalności upowszechniającej naukę

Moving Image Preservation and Cultural Capital

This article examines the changing landscape of moving image archiving in the wake of recent developments in online video sharing services such as YouTube and Google Video. The most crucial change to moving image archives may not be in regard to the collections themselves, but rather the social order that sustains cultural institutions in their role as the creators and sustainers of objectified cultural capital. In the future, moving image stewardship may no longer be the exclusive province of institutions such as archives and libraries, and may soon be accomplished in part through the work of other interested individuals and organizations as they contribute to and define collections. The technologies being built and tested in the current Internet environment offer a new model for the reimagined moving image archive, which foregrounds the user in the process of creating the archive and strongly encourages the appropriation of moving images for new works. This new archetype, which in theory functions on democratic principles, considers moving images???along with most other types of cultural heritage material???to be building blocks of creative acts or public speech acts. One might argue that the latter represents a new model for creating an archive; this new democratic archive documents and facilitates social discourse.published or submitted for publicatio

Company valuation methods. The most common errors in valuations

In this paper, we describe the four main groups comprising the most widely used company valuation methods: balance sheet-based methods, income statement-based methods, mixed methods, and cash flow discounting-based methods. The methods that are conceptually "correct" are those based on cash flow discounting. We will briefly comment on other methods since -even though they are conceptually "incorrect"- they continue to be used frequently. We also present a real-life example to illustrate the valuation of a company as the sum of the value of different businesses, which is usually called the break-up value. We finish the paper with a list of the most common errors that the author has detected in the more than one thousand valuations he has had access to in his capacity as business consultant and teacher.Value; price; free cash flow; equity cash flow; market value;