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  • Work Sample - M&A Pitch - SKM Acquisition of Sprint (Pitch To SKM)

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    Work Sample - M&A Advisory by Investment bank to SK Telecom (SKM), South Korea, to acquire Sprint based on publicly available information only. The real deal did not go through in 2008 and this case was set up for the competition such that we had to pitch for the acquisition.

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    Work Sample - M&A Pitch - SKM Acquisition of Sprint (Pitch to SKM)

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    Work Sample - M&A Advisory by Investment bank to SK Telecom (SKM), South Korea, to acquire Sprint based on publicly available information only. The real deal did not go through in 2008 and this case was set up for the competition such that we had to pitch for the acquisition.

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    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    3K vues7 pages

    Work Sample - M&A Pitch - SKM Acquisition of Sprint (Pitch To SKM)

    Transféré par

    sunnybrsrao
    Work Sample - M&A Advisory by Investment bank to SK Telecom (SKM), South Korea, to acquire Sprint based on publicly available information only. The real deal did not go through in 2008 and this case was set up for the competition such that we had to pitch for the acquisition.

    Droits d'auteur :

    Attribution Non-Commercial (BY-NC)
    Téléchargez comme PDF, TXT ou lisez en ligne sur Scribd
    Signaler comme contenu inapproprié
    sur 7

    M&A: SK Telecom and

    Sprint Nextel
    Presented by:
    Subhojit Dasgupta
    Ravi Kaushik
    Mahesh Nanjakla
    Samuel Betha
    Highlights
    z Sprint Nextel (S) z SK Telecom (SKM)
    z 3rd largest telecom operator US z Leading market player in
    z Wireless and internet Korea - mobile
    broadband convergence
    z Serves corporate, individual z Saturated domestic market
    and govt. customers (50.5%)
    z Existing subscriber & network z International presence is a
    base with CDMA & iDEN must for growth
    (GSM) z Minimal presence in US
    z High churn rate and low z Strong CDMA, WiMax &
    operational efficiency Value-added services
    z New WiMax subsidiary –
    Clearwire (high growth)
    Sprint’s Business Segments
    Sprint Group

    Nextel (iDEN) Sprint (CDMA)


    • Proprietary Motorola / GSM • CDMA + 3G
    • 12.3Mn customers (pre+post paid) • 28Mn customers (pre+post paid)
    • First responders (Govt. – DCSNet) • Customers churn since one year
    • Churn of ~5.6Mn in last 3 years (net loss) • Churn of ~1.7Mn in 1 year

    Clearwire (WiMax)
    • 51% ownership
    • Strategic partners - Google, Comcast,
    Intel, TWI (total investment of $3.2Bn)
    • New venture with high growth potential
    Sprint Nextel’s Valuation
    z Enterprise Value:
    z DCF $40-45Bn
    z Comparables $40-46Bn (1.3x EV/Sales)
    z Equity Value:
    z From DCF, no premium: $20-25Bn Î Share price $8-9
    z Current Market Cap: $10Bn (Share Price $3.45)
    z ZOPA:
    z Share Price: $4.55-6.25 (Equity Value $13-17.5Bn)
    z 30-75% control premium
    Deal structure

    SKM

    ~$12Bn
    ~$21Bn 71% ~$7Bn
    (Based on Proportion of
    Spin-off (PE backed) Revenues)
    -National security
    -Bleeding Cash flows

    • Investment options: Cash for stock, Stock swap, Cash for Convertible Debt
    • Financing Options: Debt issued in US by SKM, Private Equity
    • SKM has $1Bn cash, $20Bn debt, A-rating with D/E=0.31 (Ind. Avg 0.98) Î Can raise upto $40Bn debt
    • 100% Equity Acquired, 51% down payment (cash+debt) with earn-out clause
    • Foreign exchange risk (transaction, repatriation of earnings)

    Source: Hoovers,
    Issues to be considered
    z Regulatory approvals:
    z Political Considerations
    z CFIUS – foreign ownership of critical infrastructure?
    z FCC – spectrum ownership change issues
    z Accounting Issues:
    z IFRS – Revenue recognition etc.
    z Tax Considerations
    z Withholding taxes to be taken care of
    z Cultural Issues:
    z Organization Culture Integration
    z Leadership Team
    Post acquisition Challenges
    z Attrition of Leadership and Management:
    z ESOPs, Earnout Clause
    z Operations:
    z Operational efficiency: Customer care and subscriber acquisition
    z Rationalize network investments: Global IP backbone, Enhancing
    CDMA network, Deploying its WiMAX network
    z Consider other possible transactions: Sale of other non-core network,
    tower and business assets
    z Marketing:
    z Core services: Enhance customer satisfaction and minimize churn
    z Re-positioning – targeting premium positioning with value added
    services for customers

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