AIRTHREAD ACQUISITION
Revenue Projections: Service Revenue Service Revenue Growth
Operating Assumptions
2008 4,194.3 14.0%
2009 4,781.5 14.0%
2010 5,379.2 12.5%
2011 5,917.2 10.0%
2012 6,331.4 7.0%
Equipment Revenue Equipment Revenue/Service Revenue (1)
314.8 7.5%
358.8 7.5%
403.7 7.5%
444.1 7.5%
475.2 7.5%
Operating Expenses: System Operating Expenses System Operating Exp./Service Revenue
838.9 20.0%
956.3 20.0%
1,075.8 20.0%
1,183.4 20.0%
1,266.3 20.0%
Cost of Equipment Sold Equipment COGS
755.5 240.0%
861.2 240.0%
968.9 240.0%
1,065.8 240.0%
1,140.4 240.0%
Selling, General & Administrative SG&A/Total Revenue
1,803.6 40.0%
2,056.2 40.0%
2,313.2 40.0%
2,544.5 40.0%
2,722.6 40.0%
Depreciation & Amortization Tax Rate
705.2 15.64% 40.0%
804.0 15.64% 40.0%
867.4 15.00% 40.0%
922.4 14.50% 40.0%
952.9 14.00% 40.0%
Working Capital Assumptions (1): Accounts Receivable Days Sales Equip. Rev. Prepaid Expenses Accounts Payable Deferred Serv. Revenue Accrued Liabilities
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
631.3 14.0%
719.7 14.0%
867.4 15.0%
970.1 15.3%
1,055.0 15.5%
522 135
595 154
669 173
736 190
788 204
Capital Expenditures (2): Capital Expenditures Cap-x/Total Revenue
(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are based on total cash operating expenses. (2) Includes investments in property, plant & equipment, as well as licenses and customer lists.
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AIRTHREAD ACQUISITION
Licensing Agreemts
Total Consolidated Markets: Region Population Customers Penetration Central US 65,096 3,846 5.9% Mid-Atlantic 11,677 1,180 10.1% New England 2,830 518 18.3% Northwest 2,287 431 18.8% New York 481 147 30.6% Total 82,371 6,122 7.4% Total Operating Markets: Region Population Customers Penetration Central US 32,497 3,846 11.8% Mid-Atlantic 7,346 1,180 16.1% New England 2,344 518 22.1% Northwest 2,287 431 18.8% New York 481 147 30.6% Total 44,955 6,122 13.6%
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AIRTHREAD ACQUISITION
Customer Data: Net Customer Additions Cost Per Customer Addition Cost of New Customer Additions Cost of Equipment Sold/Equipment Revenue
Monthly Churn Rate
Revenue Per Minute Monthly ARPU Customer Minutes Per Month Revenue Per Minute
2005 301 372 111,972
Customer Operating Data
2006 310 385 119,350
2007 477 487 232,299
251.3%
219.9%
239.8%
2.1%
2.1%
1.7%
2005 45.24 625 0.0724
2006 47.23 704 0.0671
2007 51.13 859 0.0595
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AIRTHREAD ACQUISITION
Income Statement
Historical Operating Results
Operating Results: Service Revenue Plus: Equipment Sales Total Revenue Less: System Operating Expenses Less: Cost of Equipment Sold Less: Selling, General & Administrative EBITDA Less: Depreciation & Amortization EBIT Less: Interest Expense Plus: Equity in Earnings of Affiliates Plus: Gains (Losses) on Investments Plus: Other Income EBT Less: Taxes Income Before Minority Interest Less: Minority Interest Net Income
2005 2,827.0 203.7 3,030.8 604.1 511.9 1,217.7 697.0 490.1 206.9 84.9 66.7 18.1 54.5 261.3 95.9 165.5 10.5 155.0
2006 3,214.4 258.7 3,473.2 639.7 568.9 1,399.6 865.0 555.5 309.5 93.7 93.1 50.8 (46.6) 313.1 120.6 192.5 13.0 179.5
2007 3,679.2 267.0 3,946.3 717.1 640.2 1,555.6 1,033.3 582.3 451.1 84.7 90.0 83.1 7.0 546.5 216.7 329.8 15.1 314.7 40 12
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AIRTHREAD ACQUISITION
Assets: Cash & Cash Equivalents Marketable Securities Accounts Receivable Inventory Prepaid Expenses Deferred Taxes Other Current Assets Total Current Assets Property, Plan & Equipment Licenses Customer Lists Marketable Equity Securities Investments in Affiliated Entities Long Term Note Receivable Goodwill Other Long Term Assets Total Assets Liabilities & Owners' Equity: Accounts Payable Deferred Revenue & Deposits Accrued Liabilities Taxes Payable Deferred Taxes Note Payable Forward Contract Derivative Liability Other Current Liabilities Total Current Liabilities Long Term Debt Forward Contracts Derivative Liability Deferred Tax Liability Asset Retirement Obligation Other Deferred Liabilities Minority Interest Common Stock & Paid-In Capital Retained Earnings Total Liabilities & Owners' Equity
Balance Sheet
2005 29.0 0.0 362.4 92.7 32.1 8.2 15.5 539.9
2006 32.9 249.0 407.4 117.2 35.0 0.0 13.4 854.9
2007 204.5 16.4 435.5 101.0 41.6 18.6 16.2 833.8
2,553.0 1,362.3 47.6 225.4 172.1 4.7 481.2 30.0 5,416.2
2,628.8 1,494.3 26.2 4.9 150.3 4.5 485.5 31.1 5,680.6
2,595.1 1,482.4 15.4 0.0 157.7 4.4 491.3 31.8 5,611.9
254.1 111.4 42.9 36.7 0.0 135.0 0.0 0.0 82.6 662.7
254.9 123.3 47.8 26.9 26.3 35.0 159.9 88.8 93.7 856.7
260.8 143.4 59.2 43.1 0.0 0.0 0.0 0.0 97.7 604.2
1,001.4 159.9 25.8 647.1 90.2 46.2
1,001.8 0.0 0.0 601.5 127.6 62.9
1,002.3 0.0 0.0 554.4 126.8 84.5
41.9
36.7
43.4
1,375.0 1,366.0 5,416.2
1,378.9 1,614.4 5,680.6
1,404.1 1,792.1 5,611.9
working capital for 2007 115
Harvard Business Publishing 115
AIRTHREAD ACQUISITION
Amortization Schedule
Term Loan Amortization
Date: 1/31/2008 2/28/2008 3/31/2008 4/30/2008 5/31/2008 6/30/2008 7/31/2008 8/31/2008 9/30/2008 10/31/2008 11/30/2008 12/31/2008 1/31/2009 2/28/2009 3/31/2009 4/30/2009 5/31/2009 6/30/2009 7/31/2009 8/31/2009 9/30/2009 10/31/2009 11/30/2009 12/31/2009 1/31/2010 2/28/2010 3/31/2010 4/30/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/2010 10/31/2010 11/30/2010 12/31/2010 1/31/2011 2/28/2011 3/31/2011 4/30/2011 5/31/2011
Payment 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41
Annual Interest 5.50% 17 17 17 17 17 17 17 16 16 16 16 16 16 16 16 16 15 15 15 15 15 15 15 15 14 14 14 14 14 14 14 14 14 13 13 13 13 13 13 13 12
Principal 24 24 24 24 24 24 24 24 24 25 25 25 25 25 25 25 25 25 26 26 26 26 26 26 26 26 27 27 27 27 27 27 27 27 28 28 28 28 28 28 28
Amortization Balance Period 3,758 120 3,734 1 3,710 2 3,687 3 3,663 4 3,639 5 3,615 6 3,590 7 3,566 8 3,542 9 3,517 10 3,492 11 3,468 12 3,443 13 3,418 14 3,393 15 3,367 16 3,342 17 3,317 18 3,291 19 3,265 20 3,239 21 3,214 22 3,188 23 3,161 24 3,135 25 3,109 26 3,082 27 3,055 28 3,029 29 3,002 30 2,975 31 2,948 32 2,920 33 2,893 34 2,865 35 2,838 36 2,810 37 2,782 38 2,754 39 2,726 40 2,698 41
Date: 6/30/2011 7/31/2011 8/31/2011 9/30/2011 10/31/2011 11/30/2011 12/31/2011 1/31/2012 2/28/2012 3/31/2012 4/30/2012 5/31/2012 6/30/2012 7/31/2012 8/31/2012 9/30/2012 10/31/2012 11/30/2012 12/31/2012
Payment 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 2,176
Annual Interest 5.50% 12 12 12 12 12 12 12 11 11 11 11 11 11 11 10 10 10 10 10
Principal 28 29 29 29 29 29 29 29 29 30 30 30 30 30 30 30 31 31 2,166
Amortization Balance Period 2,698 84 2,669 42 2,641 43 2,612 44 2,583 45 2,554 46 2,525 47 2,496 48 2,467 49 2,437 50 2,408 51 2,378 52 2,348 53 2,318 54 2,288 55 2,257 56 2,227 57 2,196 58 2,166 59 0 60
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AIRTHREAD ACQUISITION
Equity Comparable Companies: Market Value Universal Mobile 118,497 Neuberger Wireless 189,470 Agile Connections 21,079 Big Country Communications 26,285 Rocky Mountain Wireless 7,360 Average
Net Debt 69,130 79,351 5,080 8,335 3,268
Debt/ Value 36.8% 29.5% 19.4% 24.1% 30.7% 28.1%
Debt/ Equity 58.3% 41.9% 24.1% 31.7% 44.4% 40.1%
Equity Beta 0.86 0.89 1.17 0.97 1.13 1.00
Revenue 43,882 42,684 34,698 38,896 4,064
EBIT EBITDA 11,795 16,949 7,020 14,099 1,631 9,914 6,702 12,614 510 1,028
Bl= Bu(1+(1-t)D/V) So Bu=BL/(1+(1-t)D/V)
Net Income 3,794 4,103 (30) 3,384 240
unleavered beta 0.637 0.711 1.022 0.815 0.892 0.82
Rf=4.25
Re 8.350
Rpm=5 beta =.82
Wireless Business Subscribers: Average Monthly Subscribers (in MM's) Average Monthly Minutes Total Monthly Minutes Revenue Per Minute Annual Business Revenue Increase Backhaul Savings: System Operating Expenses Backhaul Percentage Estimated Backhaul Costs Reduction in Backhaul Costs Backhaul Savings
2008 0.30 859 258 0.0506 156 2008 838.9 20.0% 167.8 0.0% 0.0
2009 0.50 885 442 0.0506 269 2009 956.3 20.0% 191.3 7.0% 13.4
2010 0.70 911 638 0.0506 387
2011 1.00 939 939 0.0506 570
2012 1.20 967 1,160 0.0506 704
2010 1,075.8 20.0% 215.2 12.0% 25.8
2011 1,183.4 20.0% 236.7 22.2% 52.5
2012 1,266.3 20.0% 253.3 30.0% 76.0
#REF!
Revenue Projections: Service Revenue Equipment Revenue Operating Expenses: System Operating Expenses Cost of Equipment Sold Selling, General & Administrative Depreciation & Amortization Tax Rate Working Capital Assumptions (1): Accounts Receivable Days Sales Equip. Rev. Prepaid Expenses Accounts Payable Deferred Serv. Revenue Accrued Liabilities Capital Expenditures (2): Capital Expenditures
2008 4,194.3 314.8
2009 4,781.5 358.8
2010 5,379.2 403.7
2011 5,917.2 444.1
2012 6,331.4 475.2
838.9 755.5 1,803.6 705.2 40.0%
956.3 861.2 2,056.2 804.0 40.0%
1,075.8 968.9 2,313.2 867.4 40.0%
1,183.4 1,065.8 2,544.5 922.4 40.0%
1,266.3 1,140.4 2,722.6 952.9 40.0%
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
41.67x 154.36x 1.38% 35.54x 14.01x 6.85x
631.3
719.7
867.4
970.1
1,055.0
522 135
595 154
669 173
736 190
788 204
EBIDTA Dep and amortization EBIT tax rate EBIT(1-t)
1,111.14 1,266.70 1,425.04 1,567.54 1,677.27 705.2 804.0 867.4 922.4 952.9 405.91 462.74 557.60 645.16 724.36 40.0% 40.0% 40.0% 40.0% 40.0% 243.5466491 277.6432 334.5593 387.0989 434.6153
Accounts Receivable Days Sales Equip. Rev. Prepaid Expenses Accounts Payable Deferred Serv. Revenue Accrued Liabilities
521.8951263 134.9679175 46.91482791 335.4213192 163.2542474 64.60903987
594.9604 153.8634 53.4829 382.3803 186.1098 73.65431
669.3305 173.0964 60.16827 430.1778 209.3736 82.86109
736.2635 190.406 66.18509 473.1956 230.3109 91.1472
787.802 203.7344 70.81805 506.3193 246.4327 97.52751
Working capital Change in WC Capital Expenditures Unleavered FCF PV found by discounting at 8.35% Interest Expense Tax sheild PV of tax sheild @ 5.5%
140.4932652 25.49326522 631.3 292.01 269.50 199 79.6 75.45023697
160.1623 19.66906 719.7 342.28 291.5594 183 73.2 65.76672
180.1826 20.02029 867.4 314.54 247.2793 166 66.4 56.54715
198.2009 18.01826 970.1 321.37 233.1802 148 59.2 47.78723
212.0749 13.87406 1,055.0 318.64 213.3835 1,254.91 128 51.2 39.17488 284.7262
Total Value
1,539.63
Net Reinvestment
116
Growthrate
2.87
from exhibit 5 working capital of 2007 is 115
discount rate of 8.35 from exhibit 7 0.922935 0.851809 0.786164 0.725578 0.669662
Interest Expense 199.000 r= 7.52
growth rate=Rinvestment Reinvestment Rate*rROIC Rate*ROIC Capex+Change in WC-Dep/(EBIT)*EBIT(1-t)/(d+e) 1068.511
Assets: Cash & Cash Equivalents Marketable Securities Accounts Receivable Inventory Prepaid Expenses Deferred Taxes Other Current Assets Total Current Assets Property, Plan & Equipment Licenses Customer Lists Marketable Equity Securities Investments in Affiliated Entities Long Term Note Receivable Goodwill Other Long Term Assets Total Assets Liabilities & Owners' Equity: Accounts Payable Deferred Revenue & Deposits Accrued Liabilities Taxes Payable Deferred Taxes Note Payable Forward Contract Derivative Liability Other Current Liabilities Total Current Liabilities Long Term Debt Forward Contracts Derivative Liability Deferred Tax Liability Asset Retirement Obligation Other Deferred Liabilities Minority Interest Common Stock & Paid-In Capital Retained Earnings Total Liabilities & Owners' Equity
2005 29.0 0.0 362.4 92.7 32.1 8.2 15.5 539.9
2006 32.9 249.0 407.4 117.2 35.0 0.0 13.4 854.9
2007 204.5 16.4 435.5 101.0 41.6 18.6 16.2 833.8
2,553.0 1,362.3 47.6 225.4 172.1 4.7 481.2 30.0 5,416.2
2,628.8 1,494.3 26.2 4.9 150.3 4.5 485.5 31.1 5,680.6
2,595.1 1,482.4 15.4 0.0 157.7 4.4 491.3 31.8 5,611.9
254.1 111.4 42.9 36.7 0.0 135.0 0.0 0.0 82.6 662.7
254.9 123.3 47.8 26.9 26.3 35.0 159.9 88.8 93.7 856.7
260.8 143.4 59.2 43.1 0.0 0.0 0.0 0.0 97.7 604.2
1,001.4 159.9 25.8 647.1 90.2 46.2
1,001.8 0.0 0.0 601.5 127.6 62.9
1,002.3 0.0 0.0 554.4 126.8 84.5
41.9
36.7
43.4
1,375.0 1,366.0 5,416.2
1,378.9 1,614.4 5,680.6
1,404.1 1,792.1 5,611.9
Cash and cash equivalents of 2008 ending balance of 2007+fcf of 08-int-principal=interest tax sheild 86.5
2008 87.0 16.0 522.0 135.0 47.0 19.0 16.0 842.0
2009 14.0 16.0 594.0 154.0 53.0 19.0 16.0 866.0
2010 0.0 16.0 670.0 173.0 60.0 19.0 16.0 954.0
2011 0.0 16.0 736.0 190.0 66.0 19.0 16.0 1,043.0
2012 0.0 16.0 787.0 <---- from sheet 1 203.0 70.0 19.0 16.0 1,111.0
2,521.096 2,436.096 2,436.096 2,484.096 2,587.096 1,482.0 1,482.0 1,482.0 1,482.0 1,482.0 15.0 15.0 15.0 15.0 15.0 0.0 0.0 0.0 0.0 0.0 158.0 158.0 158.0 158.0 158.0 4.0 4.0 4.0 4.0 4.0 491.0 491.0 491.0 491.0 491.0 32.0 32.0 32.0 32.0 32.0 5,545.096 5,484.096 5,572.096 5,709.096 5,880.096
2009
2010
2011
2012
14
-97
-207
-2462
<---- from sheet 1
PPE PPE2007+CAPEX08-DEP08
