Strategisk regnskabsanalyse og værdiansættelse af TDC A/S: Vurdering af business case for kapitalfonde

Thomas Scheel Orloff

Student thesis: Master thesis

Abstract

On 1st February 2006 a group of five PE-funds, Nordic Telephony Company, bought 87,9 % of the Danish telecommunication company TDC A/S. The main objective for this dissertation was to assess whether the business case seems to be successful for the PE-funds. By performing a valuation of TDC A/S at 1st October 2008 the internal rate of return of the initial investment was calculated and held up against an expected rate of return of 25%. As a starting point the CEO was replaced and a whole new management team was set in place. They set a new strategy focusing on core business area, rationalizations and investment in technology. Major threats arise to the underlying earnings of TDC, as they are impacted heavily by a technology change where customers substitute fixed net with mobile communications. This causes a major threat to the earnings as TDC is not capable of capturing the same market share within mobile communication. At the same time the Danish electricity companies have started to deploy their own fiber network, thus creating direct competition to the TDC fixed network. The primary valuation was based on a discounted cash flow model along with a multiple valuation based on EV/EBITDA. Sensitivity analyses were carried out for CAPEX, WACC, change in EBITDA and use of method for estimating the continuing value. An equity value span of DKK 30b to DKK 35b was estimated given the different scenarios. In order to calculate the internal rate of return for the initial investment an equity value of DKK 33,1 was used. Calculations resulted in a net loss for the PE-funds of DKK 2.8b equivalent to an internal rate of return of -8,8%, so far resulting in an unsuccessful business case for the PE-funds.

EducationsMSc in Finance and Accounting, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2008
Number of pages126