Due Diligence

Consolidation will continue to remain an important theme within the telecoms sector over the coming years as opportunities for significant growth through new licence awards has all but disappeared and many markets face saturation.  In making acquisitions, the acquirer has to exercise due diligence not only with regards to verification of the seller’s claims but also more importantly with regards to increasing shareholder value.

The objective of any M&A transaction is to create value by acquiring a business for less than it is worth to the acquirer. Coleago is uniquely placed to focus on this issue, because all our consultants are senior industry professionals with a minimum of 10 and often 20 years of experience gained in operations and consulting. This experience means that our consultants do not only focus on the numbers but can home in on the underlying strategic and operational issues.

Coleago’s experience and expertise is channelled through a robust process supported by benchmarks and models. Coleago’s structured approach, notably the business planning and valuation workstream, focuses on discovering the dynamics of the target business and hence supports the value creation objective.  Good business modelling is also part of the verification aspect of due diligence because it will reveal inconsistencies in the seller’s business case.  

The benefits of consolidation within the mobile telecoms sector are most likely to arise from intra-country consolidation. Some of the greatest synergies arising from the merger of two mobile operators within a country should arise from the rationalisation of the network. However, as history has proven again and again the anticipated benefits of a merger are not always realised in full. Coleago brings a practical and experienced perspective to technical due diligence and has extensive experience of the challenges of consolidating networks.

Commercial due diligence and technical due diligence go hand in hand, since a revenue objective has to be supported by adequate network resources.  Verifying that the forecast revenue is supported by budgeted capex is essential. We have also encountered cases where in order to show an improved cash flow  the seller delayed capex. Such tactics can be revealed by analysing trends in network KPIs and it is likely to have a material impact on the valuation.

Call Coleago now and speak to Coleago’s experts to receive our due diligence process description or download the due diligence overview from this page. Coleago’s expertise and well structured approach to due diligence is designed to ensure that your acquisitions create the value your shareholders expect.

Main contacts:

Graham Friend
Managing Director
Tel: +41 79 855 1354
graham.friend@coleago.com

Scott McKenzie
Director
Tel: +44 7825 294 576
scott.mckenzie@coleago.com

Downloads

Due Diligence Overview Coleago.pdf