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AirThread Projections ($ Mln)

Revenue Projections: 2007 2008 2009


Service Revenue 4,194.3 4,781.5
Service Revenue Growth 14.0% 14.0%

Equipment Revenue 314.8 358.8


Equipment Revenue/Service Revenue (1) 7.5% 7.5%

Operating Expenses:
System Operating Expenses 838.9 956.3
System Operating Exp./Service Revenue 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2


Equipment COGS 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2


SG&A/Total Revenue 40.0% 40.0%

Depreciation & Amortization 705.2 804.0


15.64% 15.64%
Tax Rate 40.0% 40.0%

Working Capital Assumptions (1):


Accounts Receivable 41.67x 41.67x
Days Sales Equip. Rev. 154.36x 154.36x
Prepaid Expenses 1.38% 1.38%
Accounts Payable 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x
Accrued Liabilities 6.85x 6.85x

Capital Expenditures (2):


Capital Expenditures 631.3 719.7
Cap-x/Total Revenue 14.0% 14.0%

522 595
135 154

EBITDA 1,111 1,267


Depreciation & Amortization 705 804
EBIT 406 463
EBIT*(1-t) 244 278
Capex 631 720

Working Capital Calculation


Accounts Receivable 522 595
Days Sales Equip. Rev. 135.0 153.9
Prepaid Expenses 46.9 53.5
Accounts Payable 335.4 382.4
Deferred Serv. Revenue 163.3 186.1
Accrued Liabilities 64.6 73.7

Working Capital 114.7 140 160


Change in Working Capital 26 20

Free Cash Flow (FCF) 292 342


PV of FCF 269.3 291.7
2010 2011 2012
5,379.2 5,917.2 6,331.4
12.5% 10.0% 7.0%

403.7 444.1 475.2


7.5% 7.5% 7.5%

1,075.8 1,183.4 1,266.3


20.0% 20.0% 20.0%

968.9 1,065.8 1,140.4


240.0% 240.0% 240.0%

2,313.2 2,544.5 2,722.6


40.0% 40.0% 40.0%

867.4 922.4 952.9


15.00% 14.50% 14.00%
40.0% 40.0% 40.0%

41.67x 41.67x 41.67x


154.36x 154.36x 154.36x
1.38% 1.38% 1.38%
35.54x 35.54x 35.54x
14.01x 14.01x 14.01x
6.85x 6.85x 6.85x

867.4 970.1 1,055.0


15.0% 15.3% 15.5%

669 736 788


173 190 204

1,425 1,568 1,677


867 922 953
558 645 724
335 387 435
867 970 1,055

669 736 788


173.1 190.4 203.7
60.2 66.2 70.8
430.2 473.2 506.3
209.4 230.3 246.4
82.9 91.1 97.5

180 198 212


20 18 14

315 321 319


247.4 233.4 213.6
Adjusted Present Value of ATC ($ Mln)
2008 2009 2010 2011 2012 Total
PV of FCF 269.283 291.679 247.432 233.372 213.603 1255.37
PV of Interest tax shield 75.4502 65.7667 56.5471 47.7872 39.1749 284.726
Total Value 1540.1

Terminal Value
Growth Rate 4.52%
PV of TV 5052.83 6302.19

Value of Operating Asset 2607.29

Enterprise Value 9200


Interest Tax Shield Calculations

Discount rate, Kd 5.50%


2008 2009 2010 2011 2012
Interest 199 183 166 148 128
Tax Rate 40% 40% 40% 40% 40%
Tax shield 79.6 73.2 66.4 59.2 51.2
PV 75.4502 65.7667 56.5471 47.7872 39.1749 284.73
Non-Operating Assets
Market Multiples approach
Equity Net Debt/
Comparable Companies: Market Value Debt Value
Universal Mobile 118,497 69,130 36.8%
Neuberger Wireless 189,470 79,351 29.5%
Agile Connections 21,079 5,080 19.4%
Big Country Communications 26,285 8,335 24.1%
Rocky Mountain Wireless 7,360 3,268 30.7%
Average 28.1%

Average P/E 28.97


Equity in Earnings of Affiliates $ 90
Value of Non-Operating Assets $ 2,607.29
Debt/ Equity Net
Equity Beta Revenue EBIT EBITDA Income
58.3% 0.86 43,882 11,795 16,949 3,794
41.9% 0.89 42,684 7,020 14,099 4,103
24.1% 1.17 34,698 1,631 9,914 (30)
31.7% 0.97 38,896 6,702 12,614 3,384
44.4% 1.13 4,064 510 1,028 240
40.1% 1.00
P/E
Rtaio
31.23
46.18

7.77
30.70
28.97
Cost of capital when 100% equity financed, Ka
Unlevered Beta calculation

Comparable Companies:
Universal Mobile
Neuberger Wireless
Agile Connections
Big Country Communications
Rocky Mountain Wireless
Average

Unlevered Beta
Risk free return
Risk premium

Ka

Cost of Debt, Kd

Terminal growth rate Calculation


Return on Capital
EBIT(1-t)
Capital
ROIC

Reinvestment rate

Growth rate

WACC for discounting Terminal Value


Average Debt to Value
Debt/Equity
Unlevered Beta
Beta
Cost of Equity
Cost of Debt
WACC
Equity Net Debt/ Debt/ Equity Net
Market Value Debt Value Equity BetaRevenue EBITEBITDA Income
118,497 69,130 36.8% 58.3% 0.86 43,882 11,795 16,949 3,794
189,470 79,351 29.5% 41.9% 0.89 42,684 7,020 14,099 4,103
21,079 5,080 19.4% 24.1% 1.17 34,698 1,631 9,914 (30)
26,285 8,335 24.1% 31.7% 0.97 38,896 6,702 12,614 3,384
7,360 3,268 30.7% 44.4% 1.13 4,064 510 1,028 240
28.1% 40.1% 1.00

0.82
4.25%
5.00%

8.33%

5.50%

435
1540.1
28.22%

16.01%

4.5%

28.1%
39.1%
0.82
1.1346105885
9.92%
5.50%
8.06%
Tax levered
Rate (%) Beta
40% 0.64
40% 0.71
40% 1.02
40% 0.81
40% 0.89
0.82
Item Value ($ Mln)
Unlevered Operating FCFs (w/o Terminal Value) 1255
Interest Tax Shield 285
Terminal Value 5053
Value of Non-Operating Assets 2607
Total Value before Private Company Discount 9200
Private Company Discount (35%) 3220
Total Intrinsic value of AirThread Connections 5980