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In-building solution joint venture assessment

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The problem

A private-equity fund was reviewing a joint-venture (JV) opportunity with a leading regional in-building solutions (IBS) system integrator (the target). The JV would provide exclusive IBS neutral-host services in an iconic venue of a major Southeast Asian country. Further to this opportunity, the private-equity fund was also evaluating setting up a regional IBS neutral-host provider with the target. The private-equity fund contracted us to conduct a due diligence of this potential opportunity in order to make an informed decision on the investment.

The solution

We firstly defined and identified the current business models and the competitive advantage levers in the IBS neutral-host business; this enabled the client to understand the monetisation potential and the sustainability of this business.

Capitalising on our in-depth understanding of the telecoms markets in the region, we then examined the technology trends and their impact on the demand for IBS, market requirements for additional capacity and coverage, developments of new buildings requiring IBS and operators’ perspectives on the deployment of IBS vis-à-vis outdoor base transceiver stations. Following the analysis, we quantified the revenue potential from major buildings for IBS neutral-host providers in six Southeast Asian countries and completed a detailed market attractiveness review.

In accordance with the potential JV’s operating and business model, we reviewed the business plan prepared by the management and validated the key revenue, opex and capex projections. We conducted management interviews and reviewed the network deployment plan for the iconic venue and the contractual agreements with different stakeholders.

Finally, we interviewed key technical staff from the target and combined the interview findings with opinions from our internal experts to understand the likely requirements of new technologies and upgrades, all with the aim of future-proofing our conclusions.

The result

Analysys Mason’s engagement enabled the client to understand whether the business model was sustainable and a worthwhile investment. Our comprehensive assessment of the business plan helped the client to properly factor the key value drivers and risks into the deal valuation. 

Thanks to our work, the client's investment committee had enough information to make an informed decision. In the end, Analysys Mason's applied intelligence, regional insight, technical expertise and analytical rigour made a real difference and provided the client with a solid investment rationale. The transaction has since been completed successfully.

The team

We were initially recommended to our client by one of their staff, who contacted us for potential specialist support. Impressed by our significant knowledge of the sector and the IBS business model, as well as our clear ideas on the scope and key issues during the initial dialogue, the client selected us for this due diligence project. Upon completion of the project, the client confirmed that it was very pleased with the deliverables, expressing that the project had been very well managed and the Analysys Mason team had been very flexible catering to its needs.

Our work helped the private-equity fund to gain a clear picture of the value drivers, the risks and the key success factors related to the IBS neutral-host business, providing valuable inputs for the transaction valuation

Key fact 1

IBS is becoming an increasing part of network deployment for mobile operators, particularly with the deployment of 3G and 4G technologies and the increasing consumption of mobile data indoors. Operating a third-party IBS neutral-host business is a relatively new concept in Southeast Asia. Analysys Mason's extensive experience in the region, our good understanding of this business model and our technical expertise make us an ideal adviser for this type of transaction.

Key fact 2

Due diligence projects are typically highly intensive because of the timelines involved and the need for absolute rigour. In this project, the members of our team made use of their extensive expereience in mobile technology, as well as a good understanding of operators' and end users' needs to help the client make an informed decision within the timeframe allocated.