Benchmarking exercise to estimate funding requirements for a multinational mobile operator’s future licence payments

The problem

• A large multinational mobile group wanted to know what future payments to expect for licence renewals and upcoming spectrum auctions across a number of its markets in order to inform its medium-term budgeting and financial planning
• A comprehensive licence valuation exercise for each market would be too expensive in terms of time and resources, so an innovative approach was needed to derive suitable estimates

The solution

• Our assessment of the client’s needs used the expiration dates of existing licences and their desired outcomes from upcoming spectrum auctions
• We also assessed the value of operating licences without spectrum based on analysis and categorisation of regulatory fees
• Our approach leveraged Analysys Mason’s extensive library of global spectrum and licence payment values in order to use suitable benchmarks¹
• We developed a model that normalised benchmark values for appropriate factors in each market (e.g. population, wealth, technology)
• Our approach also considered qualitative factors with the potential to influence valuations relative to benchmark levels (e.g. regulatory and policy environment, competition, spectrum availability and licence obligations)

Figure: Illustrative results for estimated payments by country and year (USD million)

The result

• Our methodology provided low, medium and high estimates for spectrum and operating licence payments across 13 markets until 2025
• Our client was able to incorporate our results into its group-level financial planning, to help prepare for the substantial funding needed in 2021
• The group CFO said “this project has been the best use of my budget this year”

¹ See: https://www.analysysmason.com/research/content/data-set/spectrum-auction-tracker-rdts0/