Industry Observations March 31, Telecommunication Services Industry

Transcription

1 Industry Observations March 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 03/31/17 % 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 $ % $255, $369, % $403, $163, $49, $164, $53, ATN International, Inc. ATNI $ % $1, $1, % $1, $ $ $ $ CenturyLink, Inc. CTL $ % $12, $33, % $47, $17, $6, $16, $6, Cogent Communications Holdings, Inc. CCOI $ % $1, $2, % $ $ $ $ $ Frontier Communications Corporation FTR $ % $2, $19, % $29, $8, $3, $9, $3, Level 3 Communications, Inc. LVLT $ % $20, $30, % $24, $8, $2, $8, $2, SBA Communications Corp. SBAC $ % $14, $23, % $7, $1, $1, $1, $1, Telephone & Data Systems Inc. TDS $ % $2, $5, % $9, $5, $ $5, $1, T-Mobile US, Inc. TMUS $ % $53, $78, % $65, $37, $9, $40, $10, United States Cellular Corporation USM $ % $3, $4, % $7, $3, $ $3, $ Verizon Communications Inc. VZ $ % $198, $305, % $244, $125, $43, $124, $44, Windstream Holdings, Inc. WIN $ % $1, $10, % $11, $5, $1, $6, $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 4.1% 10.8% 6.5% 11.6% 4.6% 30.4% 2.3x 2.2x 7.4x 7.0x ATN International, Inc. ATNI 4.2% 3.1% 5.1% 28.6% 5.8% 32.4% 2.6x 2.3x 7.9x 7.0x CenturyLink, Inc. CTL 3.4% 4.6% 4.8% -2.4% -4.5% 37.1% 1.9x 2.0x 5.1x 5.4x Cogent Communications Holdings, Inc. CCOI 5.4% N/A 6.2% 9.3% 16.0% 30.9% 5.5x 4.9x 17.8x 14.1x Frontier Communications Corporation FTR 3.2% -7.4% 4.1% 59.5% 50.8% 39.0% 2.2x 2.1x 5.7x 5.4x Level 3 Communications, Inc. LVLT 3.6% 6.4% 4.1% -0.7% 4.4% 32.6% 3.8x 3.7x 11.5x 10.5x SBA Communications Corp. SBAC 3.6% N/A 3.9% -0.3% -1.1% 64.6% 14.6x 14.0x 22.5x 20.0x Telephone & Data Systems Inc. TDS 0.4% 1.1% 0.6% -1.4% -9.0% 18.0% 1.0x 1.0x 5.6x 4.9x T-Mobile US, Inc. TMUS 3.1% 8.4% 4.2% 16.2% 33.7% 25.0% 2.1x 1.9x 8.4x 7.5x United States Cellular Corporation USM 0.0% 1.4% 0.0% -1.5% -8.4% 15.7% 1.1x 1.1x 6.9x 6.8x Verizon Communications Inc. VZ 7.0% 65.0% 13.2% -4.3% -12.5% 34.5% 2.4x 2.5x 7.0x 6.8x Windstream Holdings, Inc. WIN 2.8% % 3.3% -6.6% -9.0% 33.7% 2.0x 1.8x 6.0x 5.5x Mean 3.4% -6.8% 4.7% 9.0% 5.9% 32.8% 3.5x 3.3x 9.3x 8.4x Median 3.5% 6.9% 5.8% 20.1% 5.2% 31.4% 2.4x 2.2x 7.2x 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 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 April 1, 2016 to March 31, 2017 USD in millions) Close Date Target Acquirer Target Company Primary Industry Implied Enterprise Value 4/1/2016 Verizon Florida LLC, GTE Southwest Incorporated and Verizon Frontier Communications Corporation Integrated Telecommunication Services $10, /18/2016 Bright House Networks, LLC CCH I, LLC Integrated Telecommunication Services $10, /1/2017 XO Communications, LLC Verizon Communications Inc. Alternative Carriers $1, /17/2017 FPL TEL, LLC, FPL FiberNet, LLC and NextEra FiberNet, LLC Crown Castle International Corp. Alternative Carriers $1, /10/2017 Inteliquent, Inc. Onvoy, LLC Alternative Carriers $ /1/2017 Grande Communications Networks LLC TPG Capital, L.P. Integrated Telecommunication Services $ /6/2016 NTELOS Holdings Corp. Shenandoah Telecommunications Company Wireless Telecommunication Services $ /27/2016 Emerging Markets Communications LLC Global Eagle Entertainment Inc. Alternative Carriers $ /1/2017 Harris CapRock Communications, Inc. SpeedCast International Limited Alternative Carriers $ /31/2016 Tower Cloud, Inc. PEG Bandwidth, LLC (nka:uniti Fiber) Alternative Carriers $ /29/2016 Intelisys Communications, Inc. ScanSource, Inc. Integrated Telecommunication Services $ /12/2017 WOW! Lawrence Midco Alternative Carriers $ /1/2016 Caribbean Asset Holdings LLC Atlantic Tele-Network, Inc. (nka:atn Alternative Carriers $ /6/2016 Goodman Networks Incorporated, Certain Assets of Wireless Dycom Industries, Inc. Integrated Telecommunication Services $ /31/2017 Network Management Holdings LTD Communications Sales & Leasing, Inc. (nka:uniti Integrated Telecommunication Services $ /12/2016 HC Operating Company, LLC WideOpenWest Finance, LLC Alternative Carriers $ /30/ Communication Sites SBA Communications Corporation Integrated Telecommunication Services $ /1/2016 Great Lakes Comnet, Inc. Everstream Solutions, LLC Alternative Carriers $ /16/2016 Onyx NewCo LLC GTT Americas, LLC Alternative Carriers $ /1/2016 AF-Southeast, LLC Strome Mezzanine Fund IV, LP Alternative Carriers $ /1/2016 Consolidated Communications of Iowa Company Winnebago Cooperative Telecom Association; Integrated Telecommunication Services $ /1/2016 The Champaign Telephone Company and Big Broadband Services Consolidated Communications Holdings, Inc. Alternative Carriers $ /29/2017 EthoStream, LLC DCI Design Communications Inc. Alternative Carriers $ /31/2016 Crosslake Communications, Inc. West Central Telephone Association Inc; Rural Integrated Telecommunication Services $ /15/2016 Accipiter Communications, Inc. N/A Alternative Carriers $ /14/2016 TeleDynamic Communications, Inc. and Wireless Fiber BCT Consulting, Inc. Alternative Carriers $5.00 6/10/2016 Vodafone US, Certain Telecommunications Expense Management Tangoe, Inc. Wireless Telecommunication Services $4.50 4/29/2016 Northland Cable Properties Eight LP Northland Cable Television, Inc.; Northland Alternative Carriers $2.92 3/21/2017 Aerialink, Inc. CSF Corporation Wireless Telecommunication Services N/A 3/21/2017 inmotion Wireless, Inc. BAI Communications Pty Ltd Wireless Telecommunication Services N/A 3/14/2017 SoVerNet, Inc. Oak Hill Capital Partners Integrated Telecommunication Services N/A 3/1/2017 Electric Lightwave, LLC Zayo Group, LLC Alternative Carriers N/A 2/21/2017 Fonality Inc. NetFortris, Inc. Alternative Carriers N/A 1/31/2017 Lynx Network Group, Inc. Everstream Solutions, LLC Alternative Carriers N/A 1/31/2017 InterLinx Communications LLC TDS Broadband Service LLC Integrated Telecommunication Services N/A 1/24/2017 Norcast Communications Corporation Digital West Networks, Inc. Integrated Telecommunication Services N/A 1/17/2017 Detel Computer Solutions Llc And Broadplex LLC Conterra Ultra Broadband, LLC Alternative Carriers N/A 1/17/2017 Midwest Underground Solutions, Specific Assets FTE Networks, Inc. Integrated Telecommunication Services N/A 1/4/2017 Oxford County Telephone & Telegraph Co Inc. Oak Hill Capital Partners Integrated Telecommunication Services N/A 12/6/2016 Velocity Networks, Inc. Globalgig Limited Alternative Carriers N/A 12/5/2016 Consolidated Communications Holdings, Inc., Enterprise Services eplus Technology, inc. Integrated Telecommunication Services N/A 11/28/2016 Telecom North America, Inc. Knowroaming Ltd. Integrated Telecommunication Services N/A 11/17/2016 Capaciti Networks Inc. WyTec International, Inc. Wireless Telecommunication Services N/A 11/14/2016 itv-3, Inc. (nka:i3 Broadband) Seaport Capital; CountryWide Broadband, LLC Alternative Carriers N/A 11/1/ Collect, Inc. viiz communications Integrated Telecommunication Services N/A 10/20/2016 Pangaea Networks, Inc. Cleareon Fiber Networks, LLC Alternative Carriers N/A 10/4/2016 Voice Innovations, LLC MRI Software LLC Integrated Telecommunication Services N/A 9/29/2016 New River Valley Unwired, LLC All Points Broadband Alternative Carriers N/A 9/21/2016 NetWeave Integrated Solutions, Inc. N/A Alternative Carriers N/A 9/19/2016 DSCI Corporation U.S. TelePacific Corp. Integrated Telecommunication Services N/A 9/14/2016 Coastcom, Inc. and Sawtooth Technologies, LLC Wave Broadband, LLC Wireless Telecommunication Services N/A 9/8/2016 OneCommand, Inc. Dealer Product Services Inc. (nka:affinitiv, Inc.) Integrated Telecommunication Services N/A 9/8/2016 TVC Albany, Inc. Oak Hill Capital Partners Alternative Carriers N/A 8/18/2016 AGL Consulting, Ltd. Arvig Enterprises, Inc. Alternative Carriers N/A 8/18/2016 GWI, Inc., Wireless Internet Network Assets N/A Wireless Telecommunication Services N/A 8/15/2016 CloudConnect, LLC Simplified Networks, LLC Alternative Carriers N/A 8/11/2016 Netel, Inc. Meimoun & Mammon, LLC Integrated Telecommunication Services N/A 8/4/2016 Broadpoint, LLC Tampnet Inc Integrated Telecommunication Services N/A 8/2/2016 MLR, LLC, Portfolio of Wireless Patents Anton Innovations Inc. Wireless Telecommunication Services N/A 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% 12/31/2016 1/31/2017 2/28/2017 3/31/2017 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 7,080 6,957 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 6,000 4,000 2,000 4,204 4,641 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 0 $1,000 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q M&A Deals - USA & Canada M&A Deals - Rest of the World M&A Deal Count - Total Transaction Value ($ Billions) $900 $800 $700 $600 $500 $400 $354.4 $343.6 $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 $300 $200 $100 $252.2 $246.4 $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 $0 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 2Q 3Q 4Q 1Q 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 1Q17 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, private placement 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 asmith@houlihancapital.com Paul Clark pclark@houlihancapital.com Michael Norton mnorton@houlihancapital.com