Industry Observations December 31, Telecommunication Services Industry

Transcription

1 Industry Observations December 31, 2017 Telecommunication Services Industry

2 Select Telecommunication Services Public Company Industry Data (USD in millions, except per share data) Company Name Ticker Price at 12/30/17 % of 52 Week High Market Data Equity Value Enterprise Value Debt / Total Capital Total Assets LTM Operating Data LTM Revenue LTM Forward Estimates CY 2017 Revenue Estimate CY 2017 Estimate Telecommunication Services AT&T Inc. T $ % $238, $347, % $443, $160, $48, $160, $51, ATN International, Inc. ATNI $ % $ $1, % $1, $ $ $ $ CenturyLink, Inc. CTL $ % $17, $43, % $50, $16, $5, $17, $6, Cogent Communications Holdings, Inc. CCOI $ % $2, $2, % $ $ $ $ $ Frontier Communications Corporation FTR $ % $ $18, % $27, $9, $3, $9, $3, Level 3 Communications, Inc. LVLT $0.00 #DIV/0! $0.00 $ % $ $ $40.85 $0.00 $0.00 SBA Communications Corporation SBAC $ % $19, $28, % $7, $1, $1, $1, $1, Telephone and Data Systems, Inc. TDS $ % $3, $5, % $9, $4, $ $5, $1, T-Mobile US, Inc. TMUS $ % $52, $83, % $67, $39, $10, $40, $10, United States Cellular Corporation USM $ % $3, $4, % $6, $3, $ $3, $ Verizon Communications Inc. VZ $ % $215, $338, % $254, $124, $43, $125, $45, Windstream Holdings, Inc. WIN $ % $ $11, % $12, $5, $1, $5, $1, Notes: LTM (latest twelve months); Enterprise Value (market capitalization less total cash and short-term investments plus short-term borrowings and total long-term debt); (earnings before interest, taxes, depreciation and amortization) Source: Capital IQ The material contained in this publication is meant to provide general information regarding valuation topics. This publication does not constitute investment advice with respect to the securities of any company discussed herein, is not intended to provide information upon which to base an investment decision, and should not be construed as such. Professional advice should be obtained before taking any action based on the information contained herein. Publicly available information utilized in this publication has been obtained from sources deemed to be reliable. Houlihan does not guarantee the accuracy or completeness of the information provided within this publication. The material presented reflects information known to the authors at the time this publication was written and this information is subject to change. Houlihan Capital 2

3 Select Telecommunication Services Public Company Valuation Metrics (USD in millions, except per share data) Company Name Telecommunication Services Ticker Return On Assets Return On Equity LTM Operating Statistics Return On Revenue Capital Growth Growth Margin TEV/ LTM Revenue Trading Multiples TEV/ TEV/ CY 2017 LTM Revenue TEV/ CY 2017 AT&T Inc. T 3.9% 10.6% 6.1% -2.0% -9.9% 30.4% 2.2x 2.2x 7.1x 6.7x ATN International, Inc. ATNI 3.3% 0.6% 4.1% 22.0% 7.6% 30.1% 2.1x 2.2x 6.8x 7.2x CenturyLink, Inc. CTL 2.9% 2.3% 4.0% -5.9% -11.1% 35.7% 2.6x 2.5x 7.4x 6.9x Cogent Communications Holdings, Inc. CCOI 6.4% N/A 7.4% 9.0% 12.0% 31.3% 5.3x 5.1x 17.0x 15.1x Frontier Communications Corporation FTR 3.1% -20.9% 4.0% 18.0% 18.0% 39.1% 1.9x 2.0x 5.0x 5.0x Level 3 Communications, Inc. LVLT -17.9% N/A -21.7% -1.1% N/A -12.3% 0.0x N/A 0.0x N/A SBA Communications Corporation SBAC 3.9% N/A 4.3% 4.8% 6.9% 65.8% 17.0x 16.7x 25.8x 24.0x Telephone and Data Systems, Inc. TDS 0.6% -3.9% 0.8% -3.1% -5.4% 18.7% 1.0x 1.0x 5.5x 4.7x T-Mobile US, Inc. TMUS 4.4% 11.6% 5.9% 11.6% 16.5% 26.8% 2.1x 2.1x 7.9x 7.7x United States Cellular Corporation USM 0.0% -7.5% 0.0% -3.9% -6.9% 16.1% 1.1x 1.1x 6.6x 6.3x Verizon Communications Inc. VZ 7.0% 64.9% 12.5% -2.7% -10.9% 35.3% 2.7x 2.7x 7.7x 7.5x Windstream Holdings, Inc. WIN 2.1% -95.3% 2.4% 2.9% -4.1% 31.9% 1.9x 1.9x 6.1x 5.5x Mean 1.7% -4.2% 2.5% 4.1% 1.2% 29.1% 3.3x 3.6x 8.6x 8.8x Median 3.2% 5.6% 5.1% 10.0% -1.2% 30.2% 2.1x 2.2x 7.0x 6.9x Notes: LTM (latest twelve months); NTM (next twelve months); (earnings before interest, taxes, depreciation and amortization); TEV (total enterprise value) Source: Capital IQ Houlihan Capital 3

4 Telecommunication Services Public Company LTM Equity Performance 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% 0.00% -5.00% % % % Telecommunication Services Dow Jones Industrial Average S&P 500 Index Note: The indices are derived from the equity performance of the previously listed companies. Source: Capital IQ Houlihan Capital 4

5 Recent M&A Activity in the Telecommunication Services Industry January 1, 2017 to December 31, 2017 USD in millions) Close Date Target Acquirer Target Company Primary Industry Implied Enterprise Value 7/31/2017 Level 3 Communications, Inc. (nka:level 3 Parent, LLC) CenturyLink, Inc. Alternative Carriers $4,358, /27/2017 Lightower Fiber Networks LLC Crown Castle International Corp. (REIT) Alternative Carriers $812, /26/2017 XO Communications, LLC Verizon Communications Inc. Alternative Carriers $225, /10/2017 FPL TEL, LLC, FPL FiberNet, LLC and NextEra FiberNet, LLC Crown Castle International Corp. (REIT) Alternative Carriers $185, /11/2017 Fairpoint Communications, Inc. Consolidated Communications Holdings, Inc. Integrated Telecommunication Services $184, /20/2017 Lumos Networks Corp. EQT Partners AB; EQT Infrastructure, L.P. Alternative Carriers $110, /6/2017 Southern Light, LLC Uniti Group Inc. Alternative Carriers $89, /16/2017 Inteliquent, Inc. Onvoy, LLC Alternative Carriers $83, /16/2017 Grande Communications Networks LLC TPG Capital, L.P. Integrated Telecommunication Services $79, /4/2017 Over 500 Sites in United States American Tower Corporation (REIT) Integrated Telecommunication Services $53, /13/2017 Harris CapRock Communications, Inc. SpeedCast International Limited Alternative Carriers $52, /11/2017 WOW! Lawrence Midcontinent Communications Alternative Carriers $26, /6/2017 WideOpenWest, Inc., Fiber-Optic Network Assets Verizon Communications Inc. Alternative Carriers $25, /6/2017 Broadview Networks Holdings, Inc. Windstream Holdings, Inc. Alternative Carriers $25, /21/2017 Hunt Telecommunications, LLC Communications Sales & Leasing, Inc. (nka:uniti Integrated Telecommunication Services $21, /21/2017 UltiSat Inc. SpeedCast International Limited Alternative Carriers $11, /14/2017 ITC Cellular, LLC Sector Telecom Georgia LLC Wireless Telecommunication Services $8, /1/2017 Network Management Holdings LTD Communications Sales & Leasing, Inc. (nka:uniti Integrated Telecommunication Services $7, /1/2017 Transbeam, Inc. GTT Americas, LLC Integrated Telecommunication Services $3, /1/2017 Giglinx Global, Inc. GTT Communications, Inc. Alternative Carriers $2, /17/2017 True Wireless LLC KSIX Media Holdings, Inc. (nka:surge Holdings, Wireless Telecommunication Services $1, /3/2017 EthoStream, LLC DCI Design Communications Inc. Alternative Carriers $1, /17/2017 Nine Communication Sites SBA Communications Corporation Integrated Telecommunication Services $ /3/2017 Etelix.com USA LLC Metrospaces, Inc. Wireless Telecommunication Services $ /10/2017 USCOC of Greater Missouri, LLC, WPZK706 License Sprint Spectrum L.P. Wireless Telecommunication Services NA 2/1/2017 Smithville Spectrum, LLC, AWS-1 A Block WQGB435 and Cellco Partnership, Inc. Wireless Telecommunication Services NA 10/2/2017 TeleGuam Holdings, LLC Huntsman Family Investments, LLC Alternative Carriers NA 1/1/2017 RRB TELECOM WISCONSIN LLC NetForward Corp. Alternative Carriers NA 1/12/2017 Clarity Telecom, LLC, Certain Cable Television, Fiber Network 1/0/1900 Alternative Carriers NA 12/14/2017 Hawaiian Telcom Holdco, Inc., Payphone Services Business viiz communications Integrated Telecommunication Services NA 7/28/2017 EchoSat Communications Group, Inc. N/A Alternative Carriers NA 7/3/2017 Hargray Communications Group, Inc. N/A Alternative Carriers NA 11/6/2017 Communications Service Wisconsin LLC. Bay Communications, Inc. Integrated Telecommunication Services NA 7/20/2017 Parallel Infrastructure LLC Lend Lease (US), Inc. Integrated Telecommunication Services NA 1/31/2017 XBP Inc. BroadVoice, Inc. Alternative Carriers NA 10/3/2017 Spoken Communications Inc., Directory Assistance and Operator viiz communications Integrated Telecommunication Services NA 5/1/2017 Cascadelink, Inc. N/A Alternative Carriers NA 7/24/2017 Woodland Holdings Corp., Prior to Merger with 4M Industrial 4M Industrial Oxidation, LLC (nka:woodland Integrated Telecommunication Services NA 3/29/2017 Aerialink, Inc. CSF Corporation Wireless Telecommunication Services NA 5/1/2017 inmotion Wireless, Inc. BAI Communications Pty Ltd Wireless Telecommunication Services NA 4/19/2017 SoVerNet, Inc. TVC Albany, Inc. Integrated Telecommunication Services NA 7/19/2017 SpiderCloud Wireless, Inc. Corning Incorporated Integrated Telecommunication Services NA 12/18/2017 KonaTel, Inc. Dala Petroleum Corp. Wireless Telecommunication Services NA 12/5/2017 Synergy Telecom, Inc. Shift8 Networks, Inc. Integrated Telecommunication Services NA 11/14/2017 Dial800, LLC Swiftreach Networks, Inc. Integrated Telecommunication Services NA 11/2/2017 Procom Corporation Communications Electronics, Inc. Wireless Telecommunication Services NA 11/1/2017 Crestview Cable Communications TDS Broadband Service LLC Alternative Carriers NA 10/18/ Communications, LLC TVC Albany, Inc. Alternative Carriers NA 9/26/2017 Advanced Call Processing Inc. Packet Fusion, Inc. Integrated Telecommunication Services NA 9/20/2017 Finger Lakes Technologies Group, Inc. TVC Albany, Inc. Alternative Carriers NA 9/18/2017 Rockefeller Group Technology Solutions, Inc. ConvergeOne, Inc. Integrated Telecommunication Services NA 9/6/2017 AnyMeeting, Inc. Intermedia.net, Inc. Integrated Telecommunication Services NA 9/5/2017 IN Communications, Inc. Ntiva, Inc. Integrated Telecommunication Services NA 8/28/2017 IFX Networks LLC Ufinet Telecom Holding S.L.U. Alternative Carriers NA 8/16/2017 ViRural Group, Inc. C3 Africa Wireless Telecommunication Services NA 8/15/2017 Northwest Vox LLC, Hosted Voice Business nexvortex, Inc. Alternative Carriers NA 8/14/ Additional Cricket Wireless Retail Locations PQH Wireless, Inc. Wireless Telecommunication Services NA 8/14/2017 All Assets of EllumNet Vergent, LLC Alternative Carriers NA 8/14/2017 All Assets of Opus3 Vergent, LLC Integrated Telecommunication Services NA Source: Capital IQ Houlihan Capital 5

6 S&P Capital IQ - Sector Last 3 Month Equity Performance 15.0% Change in Market Cap by S&P Capital IQ Sector 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% 10/1/ /1/ /1/2017 Energy Materials Industrials Consumer Discretionary Healthcare Financials Information Technology Telecommunication Services Utilities Consumer Staples Note: The indices are derived from the equity performance of the S&P Capital IQ Sectors. Source: Capital IQ Houlihan Capital 6

7 M&A Deal Flow Statistics by S&P Capital IQ Sector 16,000 M&A Deal Count - Number of Transactions 14,000 12,000 10,000 8,000 6,000 8,845 7,176 7,735 7,544 8,953 7,561 8,024 8,265 8,970 7,120 6,788 6,011 6,954 6,702 5,967 5, ,000 2,000 5,372 4,647 4,989 5,391 5,700 5,147 5,062 5,134 5,244 4,543 4,297 4,033 4,197 4,316 3,697 3, $1,000 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q M&A Deals - USA & Canada M&A Deals - Rest of the World M&A Deal Count - Total Transaction Value ($ Billions) $900 $800 $700 $600 $500 $400 $409.1 $321.9 $372.8 $381.4 $462.7 $430.2 $512.6 $406.6 $440.3 $419.0 $268.0 $295.1 $445.7 $364.7 $336.2 $292.0 $273.0 $300 $200 $100 $338.2 $400.7 $251.0 $289.7 $450.7 $402.3 $385.2 $499.4 $408.0 $403.0 $375.6 $293.7 $363.7 $363.7 $338.9 $414.0 $275.0 $0 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q Transaction Value - USA & Canada Transaction Value - Rest of World Houlihan Capital 7

8 M&A Deal Flow Statistics by S&P Capital IQ Sector Percentage Dollars Invested by Sector 4Q17 Consumer Discretionary Consumer Staples Energy Financials Healthcare Industrials Information Technology Materials Real Estate Telecommunications Services Utilities Not Listed Houlihan Capital 8

9 About Houlihan Capital Houlihan Capital is a leading, solutions-driven valuation, financial advisory and boutique investment banking firm. We pride ourselves on being thought leaders in an ever-changing landscape. Houlihan Capital is SOC-compliant, a FINRA and SIPC member and committed to the highest levels of professional ethics and standards. Valuation & Financial Advisory We provide an array of services that include enterprise valuations, portfolio valuation, valuation of carried interest, transaction opinions, tax and financial reporting compliance, purchase price allocations, and a wide variety of consulting services through our Financial Advisory Group. Investment Banking Through our Investment Banking Group, we offer sell side/buy side advisory and capital raises. Through our Special Situations desk, we provide services that fit outside the archetypal verticals, including liquidity solutions, transactional advisory, and secondary market advisory and trading. Litigation Support Our team provides support for a wide variety of situations including commercial and shareholder disputes, derivatives and structured finance litigation, and fraudulent conveyance. For additional information about our Industry expertise and services, visit: Andrew Smith Paul Clark Michael Norton pclark@houlihancapital.com asmith@houlihancapital.com mnorton@houlihancapital.com