https://urgentcomm.com/wp-content/themes/ucm_child/assets/images/logo/footer-logo.png
  • Home
  • News
  • Multimedia
    • Back
    • Multimedia
    • Video
    • Podcasts
    • Galleries
  • Commentary
    • Back
    • Commentary
    • Urgent Matters
    • View From The Top
    • All Things IWCE
    • Legal Matters
  • Resources
    • Back
    • Resources
    • Events
    • Webinars
    • White Papers
    • Reprints & Reuse
  • IWCE
    • Back
    • IWCE
    • Conference
    • Special Events
    • Exhibitor Listings
    • Premier Partners
    • Floor Plan
    • Exhibiting Information
    • Register for IWCE
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Terms of Service
    • Privacy Statement
    • Cookies Policy
  • Related Sites
    • Back
    • American City & County
    • IWCE
    • Light Reading
    • IOT World Today
    • Mission Critical Technologies
    • Microwave/RF
    • T&D World
    • TU-Auto
  • In the field
    • Back
    • In the field
    • Broadband Push-to-X
    • Internet of Things
    • Project 25
    • Public-Safety Broadband/FirstNet
    • Virtual/Augmented Reality
    • Land Mobile Radio
    • Long Term Evolution (LTE)
    • Applications
    • Drones/Robots
    • IoT/Smart X
    • Software
    • Subscriber Devices
    • Video
  • Call Center/Command
    • Back
    • Call Center/Command
    • Artificial Intelligence
    • NG911
    • Alerting Systems
    • Analytics
    • Dispatch/Call-taking
    • Incident Command/Situational Awareness
    • Tracking, Monitoring & Control
  • Network Tech
    • Back
    • Network Tech
    • Interoperability
    • LMR 100
    • LMR 200
    • Backhaul
    • Deployables
    • Power
    • Tower & Site
    • Wireless Networks
    • Coverage/Interference
    • Security
    • System Design
    • System Installation
    • System Operation
    • Test & Measurement
  • Operations
    • Back
    • Operations
    • Critical Infrastructure
    • Enterprise
    • Federal Government/Military
    • Public Safety
    • State & Local Government
    • Training
  • Regulations
    • Back
    • Regulations
    • Narrowbanding
    • T-Band
    • Rebanding
    • TV White Spaces
    • None
    • Funding
    • Policy
    • Regional Coordination
    • Standards
  • Organizations
    • Back
    • Organizations
    • AASHTO
    • APCO
    • DHS
    • DMR Association
    • ETA
    • EWA
    • FCC
    • IWCE
    • NASEMSO
    • NATE
    • NXDN Forum
    • NENA
    • NIST/PSCR
    • NPSTC
    • NTIA/FirstNet
    • P25 TIG
    • TETRA + CCA
    • UTC
Urgent Communications
  • NEWSLETTER
  • Home
  • News
  • Multimedia
    • Back
    • Video
    • Podcasts
    • Galleries
  • Commentary
    • Back
    • All Things IWCE
    • Urgent Matters
    • View From The Top
    • Legal Matters
  • Resources
    • Back
    • Events
    • Webinars
    • White Papers
    • Reprints & Reuse
    • UC eZines
    • Sponsored content
  • IWCE
    • Back
    • Conference
    • WHY ATTEND
    • Exhibitor Listings
    • Floor Plan
    • Exhibiting Information
    • Registration Opens April 2019-Join Our Mailing List
  • About Us
    • Back
    • About Us
    • Contact Us
    • Advertise
    • Terms of Service
    • Privacy Statement
    • Cookies Policy
  • Related Sites
    • Back
    • American City & County
    • IWCE
    • Light Reading
    • IOT World Today
    • TU-Auto
  • newsletter
  • In the field
    • Back
    • Internet of Things
    • Broadband Push-to-X
    • Project 25
    • Public-Safety Broadband/FirstNet
    • Virtual/Augmented Reality
    • Land Mobile Radio
    • Long Term Evolution (LTE)
    • Applications
    • Drones/Robots
    • IoT/Smart X
    • Software
    • Subscriber Devices
    • Video
  • Call Center/Command
    • Back
    • Artificial Intelligence
    • NG911
    • Alerting Systems
    • Analytics
    • Dispatch/Call-taking
    • Incident Command/Situational Awareness
    • Tracking, Monitoring & Control
  • Network Tech
    • Back
    • Cybersecurity
    • Interoperability
    • LMR 100
    • LMR 200
    • Backhaul
    • Deployables
    • Power
    • Tower & Site
    • Wireless Networks
    • Coverage/Interference
    • Security
    • System Design
    • System Installation
    • System Operation
    • Test & Measurement
  • Operations
    • Back
    • Critical Infrastructure
    • Enterprise
    • Federal Government/Military
    • Public Safety
    • State & Local Government
    • Training
  • Regulations
    • Back
    • Narrowbanding
    • T-Band
    • Rebanding
    • TV White Spaces
    • None
    • Funding
    • Policy
    • Regional Coordination
    • Standards
  • Organizations
    • Back
    • AASHTO
    • APCO
    • DHS
    • DMR Association
    • ETA
    • EWA
    • FCC
    • IWCE
    • NASEMSO
    • NATE
    • NXDN Forum
    • NENA
    • NIST/PSCR
    • NPSTC
    • NTIA/FirstNet
    • P25 TIG
    • TETRA + CCA
    • UTC
acc.com

content


What’s it worth?

What’s it worth?

In this whirlwind climate of concentration, relocation and trepidation, a question that I'm getting asked a lot is "What's it worth?" For "it," read "my
  • Written by Urgent Communications Administrator
  • 1st October 1999

In this whirlwind climate of concentration, relocation and trepidation, a question that I’m getting asked a lot is “What’s it worth?” For “it,” read “my channels,” “my towers,” “my business,” bands of spectrum auctioned by the FCC and more. It’s a question with which people wrestle with increasing frequency as operators try to decide their next moves.

Some folks are doing estate planning and want a valuation to decide what to do with a lifetime of amassed assets. Then there are those who are trying to decide whether to sell out or keep going. Other people are trying to get financing for expansion, leveraging current assets for new ones. Whatever the reason, the question is a tough one, but it is approachable.

The problem most operators have is that few people do telecommunications valuations, except those who prepare those mysterious numbers that appear on 10Q reports for publicly traded companies. If you give a large accounting firm enough money, it will find a numerical method for valuing everything. Whether that number has any basis in reality . well, let’s just say that some of the greatest works of fiction can be found on balance sheets.

But because I was getting asked the question by a lot of my clients, I figured that I had better find a way to answer. So, I turned to Michael O’Doherty for guidance. Mike is a CPA. Mike is my CPA. Mike likes reading the tax code. Mike likes doing tax returns. Mike is a very, very dull man. Nice and helpful, but dull.

He explained (I’ll give you the shortened version because the actual conversation lasted longer than Steve Forbes trying to explain why he should be president) that a valuation is an opinion, based on a reasonable methodology, gathered facts and good math, that arrives at a number on which people might rely for some purposes. He also pointed out that the person doing the valuation should have some clue as to what he is talking about.

I spent many hours with Mike learning about discounted returns on investment, book value vs. good will, and a bunch of other stuff of which only the conversationally challenged speak. (If the FBI had done a CALEA tap on our telephone conversations, there would be some federal agents out there who would have been so bored that they probably quit the service and became toll takers.)

Having made this learning sacrifice, I was now prepared to perform valuations for my clients. With my sturdy calculator and lexicon of accounting mumbo (not to mention jumbo), I performed my first valuation about eight years ago. Since then, I’ve done about 200 of them, putting a dollar value on towers, paging channels, whole businesses, SMR channels, microwave systems and more. Clients received my opinion about what a particular group of telecommunications assets were worth. But, what did I discover?

First, I found out why Mike is so dull. The work is mind-numbing. Second, I found out that most people ask the question for the same reason that many people count their chips at the blackjack table. They want some inkling about their economic status. The old, “how’m I doin'” syndrome. Let’s face it. After 20 years in the business, people want to know if they’re getting ahead and, if so, by how much.

What is surprising to many people is that some things that they consider valuable assets aren’t all that valuable, and other things that are quite precious are given a shrug by some operators. Here are some examples that might help you decide your next business investment: *Spectrum – Spectrum always has some value because it represents inventory of opportunity, competitive advantage and time (as in the time it takes to duplicate the license). Exclusive spectrum is worth more. Broadband is worth more than narrowband. Spectrum lying between 150MHz and 1,000MHz is the best, with PCS coming in a close second. *Revenue – Wonderful stuff, this “money.” With it you can pay bills, make profit and produce a return on investment. It’s also a sign of success: that you have made something out of an opportunity by creating sales. It creates cash flow against which multiples for determining value can be applied. My advice: Make a lot of this, and you will never be disappointed with a valuation. *Equipment – OK, you need this to use the spectrum and to make the dough. But, I have to tell you, it doesn’t mean much in a telecommunications valuation as compared to other stuff. Why? Because today’s wonder box is tomorrow’s obsolete tinker toy. *Location – I’ll take urban over rural most of the time, but not always. You might be surprised at the profit margin made by plenty of rural businesses. *Towers – A separate subject, but a hot market item right now. These should be valued separately from the remainder of the telecommunications business, applying different values for different situations such as a tower company vs. an operator who owns towers. *Contracts – Deals have value, particularly when they are written down. The opportunity reflected in an agreement or series of agreements is often quite valuable.

These are some of the assets that are valued regularly throughout our industry. In combination, the assets are a vital, working, ongoing business for which a financial snapshot may be appropriate to serve the needs of the owner. For example, is it a good time to sell, expand or stand pat?

Businesses, sets of assets and situations are each different. A channel in one part of the country may be worth more or less than a comparable channel in another. Assets are worth more to some buyers than others. The multiples applied to cash flow also vary among industry segments.

Which leads us back to the original question: What is it worth? Why do you want to know? The answer to this second question is as important to the valuation task as any other. If the valuation is performed for tax purposes, it might apply different (albeit legitimate) methods than a valuation for sale, purchase, estate planning or financing. The issue is who will rely on the valuation, and does that entity normally expect a highly conservative or highly optimistic approach?

There’s a line from Kenny Rogers’ song “The Gambler” that says “You never count your money while you’re sitting at the table.” Frankly, that’s bull. Ask any gambler about effective use of chips, table stakes and manipulation of antes vs. folds, consideration of betting units and . well, that’s another column. Hey, does anyone want to play poker at the next IWCE in Vegas?

Tags: content

Related


  • RugGear: Contributing to the future of mission-critical broadband communication review and market vision
    As one of the leading international developers and manufacturers of rugged mobile phones, smartphones and tablets for professional use in extreme safety and working conditions RugGear is becoming an increasingly important player in the field of mission critical communications. With our high-performance mission critical flagship product RG760 we are proud to contribute to the future […]
  • Photo gallery: 2014 Communications Marketing Conference (CMC) in Tucson
    This photo gallery features scenes from the 2014 Communications Marketing Conference (CMC) in Tucson, Ariz.
  • Top 5 Stories - Week of Sept. 22
    Top 5 Stories - Week of Sept. 22
    Here’s a look at the most popular stories on IWCE’s Urgent Communications from the last week.
  • RCA plans to expand this year's Technical Symposium
    RCA plans to expand this year's Technical Symposium
    Recent presentations, given by both startups and major corporations, have included fractal antennas, LTE, emergency communications, "invisibility cloaks" using RF, disabling IEDs with RF and tropospheric ducting.

Leave a comment Cancel reply

To leave a comment login with your Urgent Comms account:

Log in with your Urgent Comms account

Or alternatively provide your name, email address below:

Your email address will not be published. Required fields are marked *

Related Content

  • Newscan: Indiana 911 dispatch-center deadline looms
  • Newscan: Texting 911 becomes an option for some Pennylvania cell-phone users
  • Newscan: Senator wants inventory of government spectrum
  • CMA conducts 40th conference this week

Commentary


Unlocking the power of ESInets: Different NG911 provisioning approaches exist; level of control is key differentiator

7th April 2021

Ransomware? Let’s call it what it really is: extortionware

21st February 2021

Redefining communications for today’s mobile workforces

18th February 2021
view all

Events


UC Ezines


IWCE 2019 Wrap Up

13th May 2019
view all

Twitter


UrgentComm

Want to stay up-to-date on the latest #criticalcommunications and #publicsafety trends? Sign up for IWCE's Urgent C… twitter.com/i/web/status/1…

15th April 2021
UrgentComm

Ubiquiti’s latest hack highlights troubled security path for operators dlvr.it/RxkzLj

15th April 2021
UrgentComm

Dependency problems increase for open-source components dlvr.it/RxkffD

15th April 2021
UrgentComm

How smart environments will take shape post-COVID-19 dlvr.it/RxkVPH

15th April 2021
UrgentComm

RootMetrics 5G report puts AT&T in first place dlvr.it/RxkVKD

15th April 2021
UrgentComm

Newscan: Cincinnati to pay $6 million to settle suit in death of Kyle Plush who called 911 dlvr.it/RxfsSd

14th April 2021
UrgentComm

First NENA i3-compliant NG911 call to be delivered today in California, officials say dlvr.it/RxffG7

14th April 2021
UrgentComm

Look for @krehbehn to speak at #IWCE2021 September 27-30 taking place this year in the new West Hall of the #LVCC twitter.com/UrgentComm/sta…

14th April 2021

Newsletter

Sign up for UrgentComm’s newsletters to receive regular news and information updates about Communications and Technology.

Expert Commentary

Learn from experts about the latest technology in automation, machine-learning, big data and cybersecurity.

Business Media

Find the latest videos and media from the market leaders.

Media Kit and Advertising

Want to reach our digital and print audiences? Learn more here.

DISCOVER MORE FROM INFORMA TECH

  • American City & County
  • IWCE
  • Light Reading
  • IOT World Today
  • Mission Critical Technologies
  • Microwave/RF
  • T&D World
  • TU-Auto

WORKING WITH US

  • About Us
  • Contact Us
  • Events
  • Careers

FOLLOW Urgent Comms ON SOCIAL

  • Privacy
  • CCPA: “Do Not Sell My Data”
  • Cookies Policy
  • Terms
Copyright © 2021 Informa PLC. Informa PLC is registered in England and Wales with company number 8860726 whose registered and Head office is 5 Howick Place, London, SW1P 1WG.
This website uses cookies, including third party ones, to allow for analysis of how people use our website in order to improve your experience and our services. By continuing to use our website, you agree to the use of such cookies. Click here for more information on our Cookie Policy and Privacy Policy.
X