Wireless Comparable Companies ($000's)

Equity Net
Comparable Companies: Market Value Debt
Universal Mobile 118,497 69,130
Neuberger Wireless 189,470 79,351
Agile Connections 21,079 5,080
Big Country Communications 26,285 8,335
Rocky Mountain Wireless 7,360 3,268
Avgerage (w/o Rocky)

Average

1) Equity betas were estimated on a weekly based on weekly stock returns over a three year period.
Note: The current industry and competitor leverage ratios reflect the historical averages that existed over the past three years.
Including all Comparable Companies
Avg. Levered Beta 1.00 Unlevered Return
Debt Beta Risk Free Rate
Cost of Debt 5.50% Unlevered Beta

Spread 1.25% EMRP

Risk Free Rate 4.25% = Unlevered Return

EMRP 5.00%
= Debt Beta 0.25 WACC
Avg. Debt/Equity 40.09% Avg. Debt/Value

Tax Rate 40.00% Tax Rate

= Unlevered Beta 0.86 Unlevered Return

= WACC
Cost of Equity
Risk Free Rate 4.25%
Levered Beta 1.00

EMRP 5.00%

= Cost of Equity 9.27%

WACC Sensitivity Unlevered Return Cost of Debt Cost of Equity

All comparable companies 8.54% 5.50% 9.27%
Excluding Rocky 8.43% 5.50% 9.11%

Maybe try at end using ATC's D/v for a sensitivity

If we can use their D/v or makes sense

Used industry average D/V and D/E to get Ru and Wacc

 Debt/ Debt/ Equity Net
Value Equity Beta1 Revenue EBIT EBITDA Income
36.8% 58.3% 0.86 43,882 11,795 16,949 3,794
29.5% 41.9% 0.89 42,684 7,020 14,099 4,103
19.4% 24.1% 1.17 34,698 1,631 9,914 (30)
24.1% 31.7% 0.97 38,896 6,702 12,614 3,384
30.7% 44.4% 1.13 4,064 510 1,028 240
27.5% 39.0% 97.3%

28.1% 40.1% 100.4%

Excluding Outlier (Rocky Mountain)

Avg. Levered Beta 0.97 Unlevered Return
4.25% Debt Beta Risk Free Rate 4.25%
0.86 Cost of Debt 5.50% Unlevered Beta 0.84

5.00% Spread 1.25% EMRP 5.00%

8.54% Risk Free Rate 4.25% = Unlevered Return 8.43%

EMRP 5.00%
= Debt Beta 0.25 WACC
28.1% Avg. Debt/Equity 39.01% Avg. Debt/Value 27.5%

40.00% Tax Rate 40.00% Tax Rate 40.00%

8.54% = Unlevered Beta 0.84 Unlevered Return 0.08

7.58% = WACC 7.50%

Cost of Equity
Risk Free Rate 4.25%
Levered Beta 0.97

EMRP 5.00%

= Cost of Equity 9.11%

WACC
7.58%
7.50%
 Enterprise Value EV/Revenue EV/EBIT EV/EBITDA
187,627 4.28x 15.91x 11.07x
268,821 6.30x 38.29x 19.07x
26,159 0.75x 16.04x 2.64x
34,620 0.89x 5.17x 2.74x
10,628 2.62x 20.84x 10.33x
Average (w/o Rocky) 3.05x 18.85x 8.88x

Average 2.98x 19.25x 9.17x

untain)
Balance Sheet Income Statement
Assets: 2005 2006 2007 Operating Results: 2005 2006 2007
Cash & Cash Equivalents 29.0 32.9 204.5 Service Revenue 2,827.0 3,214.4 3,679.2
Marketable Securities 0.0 249.0 16.4 Plus: Equipment Sales 203.7 258.7 267.0
Accounts Receivable 362.4 407.4 435.5 Total Revenue 3,030.8 3,473.2 3,946.3
Inventory 92.7 117.2 101.0 Less: System Operating Expenses 604.1 639.7 717.1
Prepaid Expenses 32.1 35.0 41.6 Less: Cost of Equipment Sold 511.9 568.9 640.2
Deferred Taxes 8.2 0.0 18.6 Less: Selling, General & Administrative 1,217.7 1,399.6 1,555.6
Other Current Assets 15.5 13.4 16.2 EBITDA 697.0 865.0 1,033.3
Total Current Assets 539.9 854.9 833.8 Less: Depreciation & Amortization 490.1 555.5 582.3
EBIT 206.9 309.5 451.1
Property, Plan & Equipment 2,553.0 2,628.8 2,595.1 Less: Interest Expense 84.9 93.7 84.7
Licenses 1,362.3 1,494.3 1,482.4 Plus: Equity in Earnings of Affiliates 66.7 93.1 90.0
Customer Lists 47.6 26.2 15.4 Plus: Gains (Losses) on Investments 18.1 50.8 83.1
Marketable Equity Securities 225.4 4.9 0.0 Plus: Other Income 54.5 (46.6) 7.0
Investments in Affiliated Entities 172.1 150.3 157.7 EBT 261.3 313.1 546.5
Long Term Note Receivable 4.7 4.5 4.4 Less: Taxes 95.9 120.6 216.7
Goodwill 481.2 485.5 491.3 Income Before Minority Interest 165.5 192.5 329.8
Other Long Term Assets 30.0 31.1 31.8 Less: Minority Interest 10.5 13.0 15.1
Total Assets 5,416.2 5,680.6 5,611.9 Net Income 155.0 179.5 314.7

Liabilities & Owners' Equity:

Accounts Payable 254.1 254.9 260.8
Deferred Revenue & Deposits 111.4 123.3 143.4
Accrued Liabilities 42.9 47.8 59.2 Working Capital Projections 2007 2008 2009 2010
Taxes Payable 36.7 26.9 43.1 Current Assets
Deferred Taxes 0.0 26.3 0.0 Acounts Recievable 435 522 595 669
Note Payable 135.0 35.0 0.0 Inventory 101 135 154 173
Forward Contract 0.0 159.9 0.0 Prepaid Expenses 42 47 53 60
Derivative Liability 0.0 88.8 0.0 = Total 578 704 802 903
Other Current Liabilities 82.6 93.7 97.7
Total Current Liabilities 662.7 856.7 604.2 Current Liabilities
Accounts Payable 261 335 382 430
Long Term Debt 1,001.4 1,001.8 1,002.3 Deferred Revenue & Deposits 143 132 151 170
Forward Contracts 159.9 0.0 0.0 Accrued Liabilities 59 65 74 83
Derivative Liability 25.8 0.0 0.0 = Total 463 532 607 683
Deferred Tax Liability 647.1 601.5 554.4
Asset Retirement Obligation 90.2 127.6 126.8 Working Capital 115 171 195 220
Other Deferred Liabilities 46.2 62.9 84.5 Increase in Working Capital 57 24 24

Minority Interest 41.9 36.7 43.4

Common Stock & Paid-In Capital 1,375.0 1,378.9 1,404.1

Retained Earnings 1,366.0 1,614.4 1,792.1
Total Liabilities & Owners' Equity 5,416.2 5,680.6 5,611.9

2,416
 2006 WC 134 2,416
(19)

Backing-Out Working Capital Assumptions Alternative WC Calculation 0 1 2 3

Total Revenue 3,031 3,473 3,946 Average Working Capital Projections 2007 2008 2009 2010
Accounts Receivable 43.04 42.23 39.73 41.67 Current Assets
Days Sales Equip. Rev. 163.88 163.05 136.15 154.36 Acounts Recievable 435 486 542 605
Prepaid Expenses 1.43% 1.09% 1.63% 1.38% Inventory 101 144 206 295
Prepaid Expenses + Deferred Taxes 60 61 62 63
Operating Expenses 2,334 2,608 2,913 = Total 597 691 810 962
Accounts Payable 39 35 32 35.54
Deferred Serv. Revenue 14 14 14 14.01 Current Liabilities
Accrued Liabilities 7 7 7 6.85 Accounts Payable 261 287 315 346
Deferred Revenue & Deposits 143 149 155 161
Accrued Liabilities 59 60 61 63
= Total 463 496 531 569

Working Capital 133 195 279 393

Increase in Working Capital 62 84 114
 From Exhibit 1
Working Capital Assumptions (1):
Accounts Receivable 41.67x 41.67x 41.67x 41.67x 41.67x
Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x 154.36x
Prepaid Expenses 1.38% 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x 14.01x
Accrued Liabilities 6.85x 6.85x 6.85x 6.85x 6.85x

Revenue Projections: 2,008 2,009 2,010 2,011 2,012

Service Revenue 4,194 4,782 5,379 5,917 6,331
Equipment Revenue 315 359 404 444 475
= Total Revenue 4,509 5,140 5,783 6,361 6,807

Operating Expenses:
System Operating Expenses (839) (956) (1,076) (1,183) (1,266)
Cost of Equipment Sold (755) (861) (969) (1,066) (1,140)
SG&A (1,804) (2,056) (2,313) (2,544) (2,723)
= Total OpEx (3,398) (3,874) (4,358) (4,794) (5,129)

4,509

2011 2012

736 788
190 204
66 71
993 1,062

473 506
187 200
91 98
751 803

242 259
22 17
 4 5
2011 2012

675 753
421 601
64 64
1,159 1,419

380 418
167 174
64 65
611 656

548 763
156 214
 1 2 3 4
Revenue Projections: 2008 2009 2010 2011
Service Revenue 4,194.3 4,781.5 5,379.2 5,917.2
Service Revenue Growth 14.0% 14.0% 12.5% 10.0%

Equipment Revenue 314.8 358.8 403.7 444.1

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

Operating Expenses:
System Operating Expenses 838.9 956.3 1,075.8 1,183.4
System Operating Exp./Service Revenue 20.0% 20.0% 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2 968.9 1,065.8

Equipment COGS 240.0% 240.0% 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2 2,313.2 2,544.5

SG&A/Total Revenue 40.0% 40.0% 40.0% 40.0%

Depreciation & Amortization 705.2 804.0 867.4 922.4

Tax Rate 40.0% 40.0% 40.0% 40.0%

Working Capital Assumptions (1):

Accounts Receivable 41.67x 41.67x 41.67x 41.67x

Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x

Prepaid Expenses 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x

Accrued Liabilities 6.85x 6.85x 6.85x 6.85x

Capital Expenditures (2):

Capital Expenditures 631.3 719.7 867.4 970.1

Cap-x/Total Revenue 14.0% 14.0% 15.0% 15.3%

(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are
based on total cash operating expenses.

(2) Includes investments in property, plant & equipment, as well as licenses and customer lists.
 5 UFCF Projections 1 2
2012 Revenue Projections: 2008 2009
6,331.4 Service Revenue 4,194.3 4,781.5
7.0% Equipment Revenue 314.8 358.8
= Total Revenue 4,509.1 5,140.4
475.2
7.5% Operating Expenses:
System Operating Expenses (838.9) (956.3)
Cost of Equipment Sold (755.5) (861.2)
1,266.3 SG&A (1,803.6) (2,056.2)
20.0% = Total OpEx (3,398.0) (3,873.7)

1,140.4 D&A (705.2) (804.0)

240.0%
= EBIT 405.9 462.7

2,722.6 -Taxes (162.4) (185.1)

40.0% +D&A 705.2 804.0
-CapEx (631.3) (719.7)
952.9 -Increase in Working Capital 56.9 24.0
= UFCF 374.4 386.0
40.0%
Unlevered Return 8.54%

PV Cash Flows 1,445.68

41.67x

154.36x 1 2
1.38% Tax Shield from Debt 2008 2009
35.54x Interest Payments 199.4 183.1
14.01x Tax Shield 79.8 73.2

6.85x
Tax Rate 40.00%
Cost of Debt 5.50%

1,055.0 PV Tax Shield 284.78

15.5%
TV of UFCF Growth Rate Unlevered Return
CPI 4.10% 8.43%
CPI Less Food and Energy 2.40% 8.43%
GDP Growth Rate 1.80% 8.43%

Jennifer's Growth Rate 2.38% 8.43%

RJR Approach
Tax Shield Terminal Value
Debt % of terminal value 30.85%
Perpetual D/V 27.5%
Implied D (2012) 1823.9830034218
TSTV 729.5932013687
TV UFCF + TSTV 6,642.0
D/implied EV 27.4613%

Total EV $ 6,162.52
 3 4 5
2010 2011 2012 Working Capital Projections
5,379.2 5,917.2 6,331.4 Current Assets
403.7 444.1 475.2 Acounts Recievable
5,782.9 6,361.2 6,806.5 Inventory
Prepaid Expenses
= Total
(1,075.8) (1,183.4) (1,266.3)
(968.9) (1,065.8) (1,140.4) Current Liabilities
(2,313.2) (2,544.5) (2,722.6) Accounts Payable
(4,357.9) (4,793.7) (5,129.2) Deferred Revenue & Deposits
Accrued Liabilities
(867.4) (922.4) (952.9) = Total

557.6 645.2 724.4 Working Capital

(223.0) (258.1) (289.7) Increase in Working Capital

867.4 922.4 952.9
(867.4) (970.1) (1,055.0)
24.4 22.0 16.9
359.0 361.4 349.5

3 4 5 Multiple Method
2010 2011 2012
165.8 147.5 128.3 Industry Average
66.3 59.0 51.3 TV by multiple (2012)

EV (2007)

APV Handout Approach Sensitivity Analysis

UFCF 2012 TV (2012) PV TV Terminal Value Including Tax Shield
349.5 8,406.5 5,609.5 CPI
349.5 5,936.9 3,961.6 CPI Less Food and Energy
349.5 5,367.8 3,581.8 GDP Growth Rate

349.5 5,912.4 3,945.2 Jennifer's Growth Rate

 0 1 2 3 4 5
2007 2008 2009 2010 2011 2012

435 522 595 669 736 788

101 135 154 173 190 204
42 47 53 60 66 71
578 704 802 903 993 1,062

261 335 382 430 473 506

143 132 151 170 187 200
59 65 74 83 91 98
463 532 607 683 751 803

115 171 195 220 242 259

0 57 24 24 22 17

EV/Revenue EV/EBIT EV/EBITDA

3.05x 18.85x 8.88x
20,790 13,655 9,867

15,247 10,510 7,996

Sensitivity Analysis
Growth Rate Unlevered Return UFCF 2012 Perpetual D/V Rate of Constant Debt TV (2012)
4.10% 8.43% 349.5 27.46% 2.200% 9770.8
2.40% 8.43% 349.5 27.46% 2.20% 6598.4
1.80% 8.43% 349.5 27.46% 2.20% 5906.3

2.38% 8.43% 349.5 27.46% 2.20% 6568.3

PV TV Total EV
6,519.8 8,250.3
4,402.9 6,133.4
3,941.1 5,671.6

4,382.9 6,113.3
Growth Rate Calculation

Return on Capital
NOPAT 270.6336
Equity (book) 3196.156
Debt 1002.293

6.4%

Reinvestment Rate
CapEx 548.517
+ Inv. In WC 134
- Depr 582.269
/ NOPAT 270.6336
36.9%

g = ROC * Reinvestment Rate 2.4%

Balance Sheet Income Statement
Assets: 2005 2006 2007 Operating Results: 2005 2006 2007
Cash & Cash Equivalents 29.0 32.9 204.5 Service Revenue 2,827.0 3,214.4 3,679.2
Marketable Securities 0.0 249.0 16.4 Plus: Equipment Sales 203.7 258.7 267.0
Accounts Receivable 362.4 407.4 435.5 Total Revenue 3,030.8 3,473.2 3,946.3
Inventory 92.7 117.2 101.0 Less: System Operating Expenses 604.1 639.7 717.1
Prepaid Expenses 32.1 35.0 41.6 Less: Cost of Equipment Sold 511.9 568.9 640.2
Deferred Taxes 8.2 0.0 18.6 Less: Selling, General & Administrative 1,217.7 1,399.6 1,555.6
Other Current Assets 15.5 13.4 16.2 EBITDA 697.0 865.0 1,033.3
Total Current Assets 539.9 854.9 833.8 Less: Depreciation & Amortization 490.1 555.5 582.3
EBIT 206.9 309.5 451.1
Property, Plan & Equipment 2,553.0 2,628.8 2,595.1 Less: Interest Expense 84.9 93.7 84.7
Licenses 1,362.3 1,494.3 1,482.4 Plus: Equity in Earnings of Affiliates 66.7 93.1 90.0
Customer Lists 47.6 26.2 15.4 Plus: Gains (Losses) on Investments 18.1 50.8 83.1
Marketable Equity Securities 225.4 4.9 0.0 Plus: Other Income 54.5 (46.6) 7.0
Investments in Affiliated Entities 172.1 150.3 157.7 EBT 261.3 313.1 546.5
Long Term Note Receivable 4.7 4.5 4.4 Less: Taxes 95.9 120.6 216.7
Goodwill 481.2 485.5 491.3 Income Before Minority Interest 165.5 192.5 329.8
Other Long Term Assets 30.0 31.1 31.8 Less: Minority Interest 10.5 13.0 15.1
Total Assets 5,416.2 5,680.6 5,611.9 Net Income 155.0 179.5 314.7

Liabilities & Owners' Equity:

Accounts Payable 254.1 254.9 260.8
Deferred Revenue & Deposits 111.4 123.3 143.4
Accrued Liabilities 42.9 47.8 59.2 Working Capital Projections 2007 2008 2009 2010
Taxes Payable 36.7 26.9 43.1 Current Assets
Deferred Taxes 0.0 26.3 0.0 Acounts Recievable 435 540 626 714
Note Payable 135.0 35.0 0.0 Inventory 101 135 154 173
Forward Contract 0.0 159.9 0.0 Prepaid Expenses 42 47 53 60
Derivative Liability 0.0 88.8 0.0 = Total 578 722 833 947
Other Current Liabilities 82.6 93.7 97.7
Total Current Liabilities 662.7 856.7 604.2 Current Liabilities

Accounts Payable 261 335 381 428

Long Term Debt 1,001.4 1,001.8 1,002.3 Deferred Revenue & Deposits 143 132 150 169
Forward Contracts 159.9 0.0 0.0 Accrued Liabilities 59 65 73 82
Derivative Liability 25.8 0.0 0.0 = Total 463 532 605 679
Deferred Tax Liability 647.1 601.5 554.4
Asset Retirement Obligation 90.2 127.6 126.8 Working Capital 115 190 229 268
Other Deferred Liabilities 46.2 62.9 84.5 Increase in Working Capital 75 39 40

Minority Interest 41.9 36.7 43.4

Common Stock & Paid-In Capital 1,375.0 1,378.9 1,404.1

Retained Earnings 1,366.0 1,614.4 1,792.1
Total Liabilities & Owners' Equity 5,416.2 5,680.6 5,611.9
 2,416
2006 WC 134 2,416
(19)
 From Exhibit 1
Working Capital Assumptions (1):
Accounts Receivable 41.67x 41.67x 41.67x 41.67x 41.67x
Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x 154.36x
Prepaid Expenses 1.38% 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x 14.01x
Accrued Liabilities 6.85x 6.85x 6.85x 6.85x 6.85x

Revenue Projections: 2,008 2,009 2,010 2,011 2,012

Service Revenue 4,351 5,050 5,766 6,487 7,035
Equipment Revenue 315 359 404 444 475
= Total Revenue 4,666 5,409 6,170 6,931 7,511

Operating Expenses:
System Operating Expenses (839) (943) (1,050) (1,131) (1,190)
Cost of Equipment Sold (755) (861) (969) (1,066) (1,140)
SG&A (1,804) (2,056) (2,313) (2,544) (2,723)
= Total OpEx (3,398) (3,860) (4,332) (4,741) (5,053)

2011 2012 Synergies

Backhaul Costs 2008 2009 2010 2011 2012
802 869
190 204 System Operating Expenses $838.90 $956.30 $1,075.80 $1,183.40 $1,266.30
65 70 Backhaul Percentage 20% 20% 20% 20% 20%
1,058 1,143 Estimated Backhaul Costs $167.78 $191.26 $215.16 $236.68 $253.26
Reduction in Backhaul Costs 0% 7% 12% 22.20% 30%
Backhaul Savings $0.00 $13.39 $25.82 $52.54 $75.98

468 499
185 197 Wireless Business Subscribers 2008 2009 2010 2011 2012
90 96
743 792 Average Monthly Subscribers (in MM's) 0.3 0.5 0.7 1 1.2
Average Monthly Minutes 859 885 911 939 967
315 351 Total Monthly Minutes 258 443 638 939 1160
47 36 Revenue Per Minute 0.0506 0.0506 0.0506 0.0506 0.0506
Annual Business Revenue Increase ($MM $ 156 $ 269 $ 387 $ 570 $ 704
 1 2 3 4
Revenue Projections: 2008 2009 2010 2011
Service Revenue 4,194.3 4,781.5 5,379.2 5,917.2
Service Revenue Growth 14.0% 14.0% 12.5% 10.0%

Equipment Revenue 314.8 358.8 403.7 444.1

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

Operating Expenses:
System Operating Expenses 838.9 956.3 1,075.8 1,183.4
System Operating Exp./Service Revenue 20.0% 20.0% 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2 968.9 1,065.8

Equipment COGS 240.0% 240.0% 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2 2,313.2 2,544.5

SG&A/Total Revenue 40.0% 40.0% 40.0% 40.0%

Depreciation & Amortization 705.2 804.0 867.4 922.4

Tax Rate 40.0% 40.0% 40.0% 40.0%

Working Capital Assumptions (1):

Accounts Receivable 41.67x 41.67x 41.67x 41.67x

Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x

Prepaid Expenses 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x

Accrued Liabilities 6.85x 6.85x 6.85x 6.85x

Capital Expenditures (2):

Capital Expenditures 631.3 719.7 867.4 970.1

Cap-x/Total Revenue 14.0% 14.0% 15.0% 15.3%

(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are
based on total cash operating expenses.

(2) Includes investments in property, plant & equipment, as well as licenses and customer lists.

Synergies
Backhaul Costs 2008 2009 2010 2011 2012

System Operating Expenses $838.90 $956.30 $1,075.80 $1,183.40 $1,266.30

Backhaul Percentage 20% 20% 20% 20% 20%
Estimated Backhaul Costs $167.78 $191.26 $215.16 $236.68 $253.26

Reduction in Backhaul Costs 0% 7% 12% 22.20% 30%

Backhaul Savings $0.00 $13.39 $25.82 $52.54 $75.98

Wireless Business Subscribers 2008 2009 2010 2011 2012

Average Monthly Subscribers (in MM's) 0.3 0.5 0.7 1 1.2

Average Monthly Minutes 859 885 911 939 967

Total Monthly Minutes 258 443 638 939 1160

Revenue Per Minute 0.0506 0.0506 0.0506 0.0506 0.0506

Annual Business Revenue Increase ($MM $ 156 $ 269 $ 387 $ 570 $ 704
 5 UFCF Projections 1 2
2012 Revenue Projections: 2008 2009
6,331.4 Service Revenue 4,350.8 5,050.2
7.0% Equipment Revenue 314.8 358.8
= Total Revenue 4,665.6 5,409.1
475.2
7.5% Operating Expenses:
System Operating Expenses (838.9) (942.9)
Cost of Equipment Sold (755.5) (861.2)
1,266.3 SG&A (1,803.6) (2,056.2)
20.0% = Total OpEx (3,398.0) (3,860.3)

1,140.4 D&A (705.2) (804.0)

240.0%
= EBIT 562.4 744.8

2,722.6 -Taxes (225.0) (297.9)

40.0% +D&A 705.2 804.0
-CapEx (631.3) (719.7)
952.9 -Increase in Working Capital 75.0 38.9
= UFCF 486.4 570.1
40.0%
Unlevered Return 8.54%

PV Cash Flows 2,521.49

41.67x

154.36x 1 2
1.38% Tax Shield from Debt 2008 2009
35.54x Interest Payments 199.4 183.1
14.01x Tax Shield 79.8 73.2

6.85x
Tax Rate 40.00%
Cost of Debt 5.50%

1,055.0 PV Tax Shield 284.78

15.5%
TV of UFCF Growth Rate Unlevered Return
CPI 4.10% 8.43%
CPI Less Food and Energy 2.40% 8.43%
GDP Growth Rate 1.80% 8.43%

Jennifer's Growth Rate 2.38% 8.43%

RJR Approach
Tax Shield Terminal Value
Debt % of terminal value 30.85%
Perpetual D/V 27.5%
Implied D (2012) 4364.986706981
TSTV 1745.9946827924
TV UFCF + TSTV 15,895.1

D/implied EV 27.4613%

Total EV $ 13,412.67
 3 4 5
2010 2011 2012 Working Capital Projections
5,766.4 6,487.3 7,035.4 Current Assets
403.7 444.1 475.2 Acounts Recievable
6,170.1 6,931.4 7,510.5 Inventory
Prepaid Expenses
= Total
(1,050.0) (1,130.9) (1,190.3)
(968.9) (1,065.8) (1,140.4) Current Liabilities
(2,313.2) (2,544.5) (2,722.6) Accounts Payable
(4,332.1) (4,741.1) (5,053.3) Deferred Revenue & Deposits
Accrued Liabilities
(867.4) (922.4) (952.9) = Total

970.6 1,267.9 1,504.3 Working Capital

(388.3) (507.1) (601.7) Increase in Working Capital

867.4 922.4 952.9
(867.4) (970.1) (1,055.0)
39.9 47.0 35.8
622.3 760.0 836.3

3 4 5 Multiple Method
2010 2011 2012
165.8 147.5 128.3 Industry Average
66.3 59.0 51.3 TV by multiple (2012)

EV (2007)

APV Handout Approach Sensitivity Analysis

UFCF 2012 TV (2012) PV TV Terminal Value Including Tax Shield
836.3 20,117.7 13,424.0 CPI
836.3 14,207.7 9,480.4 CPI Less Food and Energy
836.3 12,845.7 8,571.6 GDP Growth Rate

836.3 14,149.1 9,441.3 Jennifer's Growth Rate

 0 1 2 3 4 5
2007 2008 2009 2010 2011 2012

435 540 626 714 802 869

101 135 154 173 190 204
42 47 53 60 65 70
578 722 833 947 1,058 1,143

261 335 381 428 468 499

143 132 150 169 185 197
59 65 73 82 90 96
463 532 605 679 743 792

115 190 229 268 315 351

75 39 40 47 36

EV/Revenue EV/EBIT EV/EBITDA

3.05x 18.85x 8.88x
22,940 28,358 11,256

17,750 21,347 9,994

Sensitivity Analysis
Growth Rate Unlevered Return UFCF 2012 Perpetual D/V Rate of Constant Debt TV (2012)
4.10% 8.43% 836.3 27.46% 2.200% 23382.5
2.40% 8.43% 836.3 27.46% 2.20% 15790.6
1.80% 8.43% 836.3 27.46% 2.20% 14134.3

2.38% 8.43% 836.3 27.46% 2.20% 15718.7

PV TV Total EV
15,602.6 18,408.9
10,536.7 13,343.0
9,431.5 12,237.8

10,488.7 13,295.0
 1 2 3 4 5
Revenue Projections: 2008 2009 2010 2011 2012
Service Revenue 4,194.3 4,781.5 5,379.2 5,917.2 6,331.4
Service Revenue Growth 14.0% 14.0% 12.5% 10.0% 7.0%

Equipment Revenue 314.8 358.8 403.7 444.1 475.2

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

Operating Expenses:
System Operating Expenses 838.9 956.3 1,075.8 1,183.4 1,266.3
System Operating Exp./Service Revenue 20.0% 20.0% 20.0% 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2 968.9 1,065.8 1,140.4

Equipment COGS 240.0% 240.0% 240.0% 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2 2,313.2 2,544.5 2,722.6

SG&A/Total Revenue 40.0% 40.0% 40.0% 40.0% 40.0%

Depreciation & Amortization 705.2 804.0 867.4 922.4 952.9

Tax Rate 40.0% 40.0% 40.0% 40.0% 40.0%

Working Capital Assumptions (1):

Accounts Receivable 41.67x 41.67x 41.67x 41.67x 41.67x

Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x 154.36x
Prepaid Expenses 1.38% 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x 35.54x

Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x 14.01x

Accrued Liabilities 6.85x 6.85x 6.85x 6.85x 6.85x

Capital Expenditures (2):

Capital Expenditures 631.3 719.7 867.4 970.1 1,055.0
Cap-x/Total Revenue 14.0% 14.0% 15.0% 15.3% 15.5%

(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are
based on total cash operating expenses.

(2) Includes investments in property, plant & equipment, as well as licenses and customer lists.
UFCF Projections 1 2 3
Revenue Projections: 2008 2009 2010
Service Revenue 4,194.3 4,781.5 5,379.2
Equipment Revenue 314.8 358.8 403.7
= Total Revenue 4,509.1 5,140.4 5,782.9

Operating Expenses:
System Operating Expenses (838.9) (956.3) (1,075.8)
Cost of Equipment Sold (755.5) (861.2) (968.9)
SG&A (1,803.6) (2,056.2) (2,313.2)
= Total OpEx (3,398.0) (3,873.7) (4,357.9)

D&A (705.2) (804.0) (867.4)

= EBIT 405.9 462.7 557.6

-Taxes (162.4) (185.1) (223.0)

+D&A 705.2 804.0 867.4
-CapEx (631.3) (719.7) (867.4)
-Increase in Working Capital (56.9) (24.0) (24.4)
= UFCF 260.6 337.9 310.1

WACC 7.50%

PV Cash Flows 1,241.95

Growing Perpetuity Approach
Terminal Value Growth Rate Terminal Value PV Terminal Value
CPI 4.10% 9657.99 6,726.9
CPI Less Food and Energy 2.40% 6334.48 4,412.0

GDP Growth Rate 1.80% 5634.66 3,924.6

Jennifer's Growth Rate 2.38% 6303.89 4,390.7

Multiples Approach
EV/Revenue EV/EBIT EV/EBITDA
Industry Average 3.05x 18.85x 8.88x
TV by multiple (2012) 20,790 13,655 14,894

EV (2007) 22,032 14,897 16,136

est in line w base npv

 4 5 0
2011 2012 Working Capital Projections 2007
5,917.2 6,331.4 Current Assets
444.1 475.2 Acounts Recievable 435
6,361.2 6,806.5 Inventory 101
Prepaid Expenses 42
= Total 578
(1,183.4) (1,266.3)
(1,065.8) (1,140.4) Current Liabilities
(2,544.5) (2,722.6) Accounts Payable 261
(4,793.7) (5,129.2) Deferred Revenue & Deposits 143
Accrued Liabilities 59
(922.4) (952.9) = Total 463

645.2 724.4 Working Capital 115

(258.1) (289.7) Increase in Working Capital 0

922.4 952.9
(970.1) (1,055.0)
(22.0) (16.9)
317.4 315.6

EV
7,968.8
5,654.0

5,166.5

5,632.7
 1 2 3 4 5
2008 2009 2010 2011 2012

522 595 669 736 788

135 154 173 190 204
47 53 60 66 71
704 802 903 993 1,062

335 382 430 473 506

132 151 170 187 200
65 74 83 91 98
532 607 683 751 803

171 195 220 242 259

57 24 24 22 17
AIRTHREAD ACQUISITION Amortization Sch
Term Loan Amortization

Annual Amortization Annual Amortization

Payment Interest Principal Balance Period Payment Interest Principal Balance Period
Date: 41 5.50% 3,758 120 Date: 41 5.50% 2,698 84
1/31/2008 41 17 24 3,734 1 6/30/2011 41 12 28 2,669 42
2/28/2008 41 17 24 3,710 2 7/31/2011 41 12 29 2,641 43
3/31/2008 41 17 24 3,687 3 8/31/2011 41 12 29 2,612 44
4/30/2008 41 17 24 3,663 4 9/30/2011 41 12 29 2,583 45
5/31/2008 41 17 24 3,639 5 10/31/2011 41 12 29 2,554 46
6/30/2008 41 17 24 3,615 6 11/30/2011 41 12 29 2,525 47
7/31/2008 41 17 24 3,590 7 12/31/2011 41 12 29 2,496 48
8/31/2008 41 16 24 3,566 8 1/31/2012 41 11 29 2,467 49
9/30/2008 41 16 24 3,542 9 2/28/2012 41 11 29 2,437 50
10/31/2008 41 16 25 3,517 10 3/31/2012 41 11 30 2,408 51
11/30/2008 41 16 25 3,492 11 4/30/2012 41 11 30 2,378 52
12/31/2008 41 16 25 3,468 12 5/31/2012 41 11 30 2,348 53
1/31/2009 41 16 25 3,443 13 6/30/2012 41 11 30 2,318 54
2/28/2009 41 16 25 3,418 14 7/31/2012 41 11 30 2,288 55
3/31/2009 41 16 25 3,393 15 8/31/2012 41 10 30 2,257 56
4/30/2009 41 16 25 3,367 16 9/30/2012 41 10 30 2,227 57
5/31/2009 41 15 25 3,342 17 10/31/2012 41 10 31 2,196 58
6/30/2009 41 15 25 3,317 18 11/30/2012 41 10 31 2,166 59
7/31/2009 41 15 26 3,291 19 12/31/2012 2,176 10 2,166 0 60
8/31/2009 41 15 26 3,265 20
9/30/2009 41 15 26 3,239 21
10/31/2009 41 15 26 3,214 22
11/30/2009 41 15 26 3,188 23
12/31/2009 41 15 26 3,161 24
1/31/2010 41 14 26 3,135 25
2/28/2010 41 14 26 3,109 26
3/31/2010 41 14 27 3,082 27
4/30/2010 41 14 27 3,055 28
5/31/2010 41 14 27 3,029 29
6/30/2010 41 14 27 3,002 30
7/31/2010 41 14 27 2,975 31
8/31/2010 41 14 27 2,948 32
9/30/2010 41 14 27 2,920 33
10/31/2010 41 13 27 2,893 34
11/30/2010 41 13 28 2,865 35
12/31/2010 41 13 28 2,838 36
1/31/2011 41 13 28 2,810 37
2/28/2011 41 13 28 2,782 38
3/31/2011 41 13 28 2,754 39
4/30/2011 41 13 28 2,726 40
5/31/2011 41 12 28 2,698 41

Harvard Business Pub

Harvard Business Pub
Amortization Schedule
arvard Business Publishing
arvard Business Publishing
AIRTHREAD ACQUISITION

Assets: 2005 2006 2007

Cash & Cash Equivalents 29.0 32.9 204.5
Marketable Securities 0.0 249.0 16.4
Accounts Receivable 362.4 407.4 435.5
Inventory 92.7 117.2 101.0
Prepaid Expenses 32.1 35.0 41.6
Deferred Taxes 8.2 0.0 18.6
Other Current Assets 15.5 13.4 16.2
Total Current Assets 539.9 854.9 833.8

Property, Plan & Equipment 2,553.0 2,628.8 2,595.1

Licenses 1,362.3 1,494.3 1,482.4
Customer Lists 47.6 26.2 15.4
Marketable Equity Securities 225.4 4.9 0.0
Investments in Affiliated Entities 172.1 150.3 157.7
Long Term Note Receivable 4.7 4.5 4.4
Goodwill 481.2 485.5 491.3
Other Long Term Assets 30.0 31.1 31.8
Total Assets 5,416.2 5,680.6 5,611.9

Liabilities & Owners' Equity:

Accounts Payable 254.1 254.9 260.8
Deferred Revenue & Deposits 111.4 123.3 143.4
Accrued Liabilities 42.9 47.8 59.2
Taxes Payable 36.7 26.9 43.1
Deferred Taxes 0.0 26.3 0.0
Note Payable 135.0 35.0 0.0
Forward Contract 0.0 159.9 0.0
Derivative Liability 0.0 88.8 0.0
Other Current Liabilities 82.6 93.7 97.7
Total Current Liabilities 662.7 856.7 604.2

Long Term Debt 1,001.4 1,001.8 1,002.3

Forward Contracts 159.9 0.0 0.0
Derivative Liability 25.8 0.0 0.0
Deferred Tax Liability 647.1 601.5 554.4
Asset Retirement Obligation 90.2 127.6 126.8
Other Deferred Liabilities 46.2 62.9 84.5

Minority Interest 41.9 36.7 43.4

Common Stock & Paid-In Capital 1,375.0 1,378.9 1,404.1

Retained Earnings 1,366.0 1,614.4 1,792.1
Total Liabilities & Owners' Equity 5,416.2 5,680.6 5,611.9
Balance Sheet
Harvard Business Publishing
AIRTHREAD ACQUISITION

Operating Assumptions
Revenue Projections: 2008 2009 2010 2011 2012
Service Revenue 4,194.3 4,781.5 5,379.2 5,917.2 6,331.4
Service Revenue Growth 14.0% 14.0% 12.5% 10.0% 7.0%

Equipment Revenue 314.8 358.8 403.7 444.1 475.2

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

Operating Expenses:
System Operating Expenses 838.9 956.3 1,075.8 1,183.4 1,266.3
System Operating Exp./Service Revenue 20.0% 20.0% 20.0% 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2 968.9 1,065.8 1,140.4

Equipment COGS 240.0% 240.0% 240.0% 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2 2,313.2 2,544.5 2,722.6

SG&A/Total Revenue 40.0% 40.0% 40.0% 40.0% 40.0%

Depreciation & Amortization 705.2 804.0 867.4 922.4 952.9

Tax Rate 40.0% 40.0% 40.0% 40.0% 40.0%

Working Capital Assumptions (1):

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

Capital Expenditures (2):

Capital Expenditures 631.3 719.7 867.4 970.1 1,055.0
Cap-x/Total Revenue 14.0% 14.0% 15.0% 15.3% 15.5%

(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are
 based on total cash operating expenses.
(2) Includes investments in property, plant & equipment, as well as licenses and customer lists.
Operating Assumptions
Harvard Business Publishing
AIRTHREAD ACQUISITION
Historical Operating Results

Operating Results: 2005 2006 2007

Service Revenue 2,827.0 3,214.4 3,679.2
Plus: Equipment Sales 203.7 258.7 267.0
Total Revenue 3,030.8 3,473.2 3,946.3
Less: System Operating Expenses 604.1 639.7 717.1
Less: Cost of Equipment Sold 511.9 568.9 640.2
Less: Selling, General & Administrative 1,217.7 1,399.6 1,555.6
EBITDA 697.0 865.0 1,033.3
Less: Depreciation & Amortization 490.1 555.5 582.3
EBIT 206.9 309.5 451.1
Less: Interest Expense 84.9 93.7 84.7
Plus: Equity in Earnings of Affiliates 66.7 93.1 90.0
Plus: Gains (Losses) on Investments 18.1 50.8 83.1
Plus: Other Income 54.5 (46.6) 7.0
EBT 261.3 313.1 546.5
Less: Taxes 95.9 120.6 216.7
Income Before Minority Interest 165.5 192.5 329.8
Less: Minority Interest 10.5 13.0 15.1
Net Income 155.0 179.5 314.7
Income Statement
Harvard Business Publishing
Licensing Agreemtns
Total Consolidated Markets:
Region Population Customers Penetration
Central US 65,096 3,846 5.9%
Mid-Atlantic 11,677 1,180 10.1%
New England 2,830 518 18.3%
Northwest 2,287 431 18.8%
New York 481 147 30.6%
Total 82,371 6,122 7.4%

Total Operating Markets:

Region Population Customers Penetration
Central US 32,497 3,846 11.8%
Mid-Atlantic 7,346 1,180 16.1%
New England 2,344 518 22.1%
Northwest 2,287 431 18.8%
New York 481 147 30.6%
Total 44,955 6,122 13.6%
AIRTHREAD ACQUISITION

Customer Data: 2005 2006 2007

Net Customer Additions 301 310 477
Cost Per Customer Addition 372 385 487
Cost of New Customer Additions 111,972 119,350 232,299

Cost of Equipment Sold/Equipment Revenue 251.3% 219.9% 239.8%

Monthly Churn Rate 2.1% 2.1% 1.7%

Revenue Per Minute 2005 2006 2007

Monthly ARPU 45.24 47.23 51.13
Customer Minutes Per Month 625 704 859
Revenue Per Minute 0.0724 0.0671 0.0595
Customer Operating Data