Airthread Valuation

EquityComparable Companies:Market Value Universal Mobile 118,497 Neuberger Wireless 189,470 Agile Connections 21,079 Big Country Communicat 26,285 Rocky Mountain Wireles 7,360 Average Debt/ Value 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 28.1% 35.0% 40.0% 45.0% 47.0% 50.0% Debt/ Equity 0.0% 5.3% 11.1% 17.6% 25.0% 33.3% 39.1% 53.8% 66.7% 81.8% 88.7% 100.0% Net Debt 69,130 79,351 5,080 8,335 3,268 Asset Beta 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 Debt/ Value 36.8% 29.5% 19.4% 24.1% 30.7% 28.1% Debt/ Equity 58.3% 41.9% 24.1% 31.7% 44.4% 40.1% Equity Beta 0.86 0.89 1.17 0.97 1.13 1.00 Asset Beta 0.64 0.71 1.02 0.81 0.89 0.82 Equity Cost of Beta Equity 0.82 8.33% 0.86 8.54% 0.91 8.78% 0.96 9.05% 1.02 9.35% 1.09 9.69% 1.13 9.92% 1.25 10.52% 1.36 11.05% 1.48 11.66% 1.54 11.94% 1.63 12.41% Cost of Debt 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% 5.50% WACC 8.33% 8.28% 8.23% 8.19% 8.14% 8.09% 8.06% 8.00% 7.95% 7.90% 7.88% 7.85% Assumptions: Marginal Tax Rate Debt Beta 40.0% 0.00 Market Risk Premi Risk-Free Rate 5.00% 4.25% Cost of Debt 5.50% 6 1.0 1.0 6.266.5 922.6 8.5 1.781.0 968.9 2.9 1.4 314.5 1.0 462.3 .0 1.266.3 334.8 0.7 2010 5.806.379.056.9 1.0 19.2 25.075.331.4 233.0 5.8 0.6 804.1 705.2 1.4 2.4 0.2 403.111.065.5 1. General & Administrative EBITDA Less: Depreciation & Amortization EBIT 2008 4.3 314.4 213.1 838.8 2.Operating Results: Service Revenue Plus: Equipment Sales Plus: Synergy Related Business Revenu Total Revenue Less: System Operating Expenses Plus: Backhaul Synergy Savings Less: Cost of Equipment Sold Less: Selling.0 861.782.055.7 247.0 755.140.5 358.0 6.0 867.4 18.1 0.6 2011 5.140.2 2.2 291.361.3 0.917.7 342.509.183.0 867.803.8 0.313.722.9 2009 4.9 724.1 321.0 4.4 Un-Levered Free Cash Flow: NOPAT Plus: Depreciation & Amortization Less: Changes in Working Capital Less: Capital Expenditures Un-Levered Free Cash Flow 243.9 13.0 5.2 444.6 277.567.255.2 1.2 405.4 20.4 645.6 1.7 0.4 956.2 2012 6.5 387.5 705.4 434.9 0.7 719.0 318.33% 1.0 970.9 631.194.425.4 557.1 922.6 PV Intermediate FC 269.2 0.6 867.3 952.3 0.677.7 804.544.4 475.6 952.3 291.2 1. 2007 EBITD Interest Coverage Ratio Maximum Interest Expense Interest Rate Est.00x Amortization Period 207 Payments Per Year 5.Pre-Synergy Est. Debt Capacity AirThread Debt Capacity: 1.50% Monthly Payment 3.033 Total Borrowing 5.758 3.758 10 Years 12 41 . 3 75.0% 59.0% 66.5 47.0% 73.1 40.3 40.2 2010 165.6 65.8 2008 199.6 39.8 56.50% PV of Intermediate Tax Shield 284.3 .0 2012 128.3 2011 147.0% 79.8 2009 183.Interest Tax Shields: Interest Expense Tax Rate Tax Shield Interest Rate 5.4 40.8 40.5 40.0% 51. #REF! . 33% TV Growth Rate 2.8 Total Intermediate Term Value 1.2 25.8 66.9 631.255.055.316.4 2012 434.8 75.3 39.4 18.0 47.4 314.4 20.7 Value of Operating Assets 5.1 922.3 269.5 705.2 65.7 342.7 247.0 867.4 6.6 804.7 719.3 .286.0 19.8 Value of Non-Operating Asset 1.826.9% TV WACC Cash Flow 4.2 291.6 867.4 233.6 Interest Tax Shields PV of Interest Tax Shields 284.0 970.9 13.1 321.4 213.6 2009 277.Un-Levered Free Cash Flows: NOPAT Plus: Depreciation & Amortization Less: Changes in Working Capital Less: Capital Expenditures Un-Levered Free Cash Flow 2008 243.718.6 51.6 Total Enterprise Value 7.6 73.3 8.5 2011 387.545.5 59.9 1.6 952.6 PV of FC 1.3 56.1 79.0 318.3 2010 334.3 291.540. 1 569.0% 12.051.3% 29.4 2012 0.0% 12.0% Depreciation & Amortization 15.9 236.5% 7.5% 7.5 2009 4.917.1 412.4 475.5) 1.0) 1.4 (52.1 398.3 413.0% EBIT 10.3 996.3% 15.3 925.0% 80.183.4) 861.4 674.0% 40.9 247.7 387.331.9 6.5% 7.2 1.194.2 403.2 164.124.7 66.8% 15.2 729.075.0% Selling.0 485.0% Effective Tax Rate 40.4 Synergy Switches: Bus.4 3.3 6.6% 27.0% -140.0% 15.0% -140.Operating Results: Service Revenue Plus: Equipment Sales Plus: Synergy Related Business Revenu Total Revenue Less: System Operating Expenses Plus: Backhaul Synergy Savings Less: Cost of Equipment Sold Less: Selling.0 16.2% 11.0% 15.0% -140.7 285.0% 40.065.5 358.140.8 591.2 1.4 2011 141.0% 40.2 454.379.2% 15.5% 14.0 957.9 2.9 1.0% 14.5 1.409.7 16.468.8% 26.3 925.0% -140.683.205.4 128.0 16.5 4.8 (25.866.5 809.0 36.0 1.5 7.163.3% 28.4 275.0% 40.665.9 1.2 704.2 444.0 595.4 2010 86.0% Equipment Sales Gross Profit -140.2 846.0 32.8 485.4% Wireless Service Gross Profit Margin 80.266.8 268.9% 14.5% Total Revenue Growth 18.3 183. Revenue Synergy: Include Synergy Exclude Synergy 1 2 Reduction in Backhaul: Include Synergy Exclude Synergy 1 2 1 1 .9 110.7 165.0% 40.1% 12.170.7 757.5 421.441.0% 80.7 357.2 2011 5.051.931. General & Administrative EBITDA Less: Depreciation & Amortization EBIT Less: Interest Expense EBT Less: Taxes Net Income Un-Levered Free Cash Flow: NOPAT Plus: Depreciation & Amortization Less: Changes in Working Capital Less: Capital Expenditures Un-Levered Free Cash Flow 2008 4.0% 80.3 574.0 755.0 729.6 5.004.175.5 757.8 156.2 2.0% 40.5% Assets: Cash & Cash Equivalents Marketable Securities 2007 204.0 147.057.8) 968.5 1.3 2010 5.3 (13.962.772.0% Equipment Sales/Service Revenue 7.6 1.4 597.0% 14.4 2.5% 10.0% 40.3 1.3 846.0% Cap-x/Revenue 14.8 2.5% 7.0 653.005.5 28.3 199.2 533.3% 8.0% 14.5 1.5 16.4 165.0% 80.005.7 475.3 (76.6 925. General & Administrative 40.6 838.4 2008 90.9 0.0% 40.5 323.6% 15.8 16.511.3% 13.3 314.6% 15.8 355.1 1.2 1.5 33.1 1.0% EBITDA 25.781.0 956.164.2 295.4 2009 87.5 1.1 16.5 Operating Margins: Service Revenue Growth 14.0% 7.6 1.7 2012 6. 4 43.3 31.086.482.4 157.3 190.4 15.1 485.2 869.0 47.2 342 134.6 1.4 157.6 16.002.5 43.4 15.7 491 193.8 18.5 323.8 5.6 626.4 43.6 2.518. Plan & Equipment Licenses Customer Lists Investments in Affiliated Entities Long Term Note Receivable Goodwill Other Long Term Assets Total Assets Liabilities & Owners' Equity: Accounts Payable Deferred Revenue & Deposits Accrued Liabilities Taxes Payable Other Current Liabilities Total Current Liabilities Long Term Debt Deferred Tax Liability Asset Retirement Obligation Other Deferred Liabilities Minority Interest Total Equity Total Liabilities & Owners' Equity Beginning Cash Plus: Un-Levered Free Cash Flow Less: After-Tax Interest Expense Less: Principal Payments Ending Cash 435.7 4.5 101.976.3 554.2 5.482.467.7 74.5 77.6 16.1 97.4 43.8 84.4 126.8 84.4 126.2 1.4) .4 157.7 919.254.7 2.1 97.2 864.4 157.Accounts Receivable Inventory Prepaid Expenses Deferred Taxes Other Current Assets Total Current Assets Property.2 973.4 15.482.7 119.6 16.2 2.0 86.566.8 143.1 1.9 90.3 31.9 5.8 84.8 5.482.198.699.7 65.4 94.3 18.7 4.3 87.3 18.4 491.9 606.8 5.8 802.1 (1.7 976.9 392 154.4 3.429.4 491.2 173.4 59.9 54.5 2.2 833.8 2.4 43.3 527 207.6 18.208.4 126.4 203.9 1.8 421.7 762.566.7 682.8 5.7 289.586.1 62.6 86.1 97.6 16.4 69.481.6 1.4 443 174.4 157.6 43.3 31.4 533.0 135.611.8 1.4 15.7 4.1 97.611.6 5.8 306.0 41.4 491.9 18.496 554.1 2.6 16.4 157.0 141.292.3 31.9 2.6 16.8 84.1 153.5 3.5 2.919.4 43.3 31.2 109.429.694.3 99.7 1.898 554.4 491.1 2.7 843.595.2 1.898.6 85.8 87.7 90.5 295.1 97.8 5.2 43.7 4.3 31.0 341.482.8 5.7 604.8 5.4 126.5 260.3 5.919.6 1.7 4.5 1.4 126.496.9 1.4 491.2 1.482.4 126.4 491.161 554.4 5.586.9 2.976.8 84.5 88.196.4 15.4 75.5 43.7 18.8 84.8 540.7 413.5 204.838 554.4 15.699.6 554.5 3.5 1.8 714.2 853.6 101.594.8 43.5 43.7 4.1 97.4 43.0 141. 0 2008 540.1 153.0 2009 626.9 2010 714.5 101.4 2012 869.1 2011 802.7 .0 135.Changes in Working Capital: Accounts Receivable Plus: Inventory 2007 435.4 203.2 173.3 190. 9 154.7 207.01 35.8 59.6 65.36 1.38% 14.36 1.0 66.54 6.36 1.67 154.67 154.Plus: Prepaid Expenses Less: Deferred Revenue Less: Accounts Payable Less: Accrued Liabilities Net Working Capital Changes in Working Capital: Accounts Receivable Plus: Inventory Plus: Prepaid Expenses Less: Deferred Revenue Less: Accounts Payable Less: Accrued Liabilities 41.38% 14.67 154.9 28.4 246.7 33.01 35.0 85.01 35.6 94.6 54.54 6.85 2009 41.3 174.2 114.7 341.67 154.36 1.54 6.6 69.54 6.3 62.38% 14.85 2011 41.3 36.85 2012 41.01 35.36 1.7 101.6 2007 47.5 312.3 193.38% 14.6 443.6 526.38% 14.01 35.85 .7 75.4 391.0 32.67 154.8 180.6 283.4 490.5 213.85 2010 41.5 2008 41.4 260.5 74.8 134.54 6.6 143. 4 352.3 413.6 Total Enterprise Value 11.8 Total Intermediate Term Value 1.5 PV of FC 1.951.990.2 1.8 66.6 51.4% TV WACC Cash Flow 8.3 8.33% TV Growth Rate 3.3 Value of Non-Operating Asset 1.1 331.005.0 352.8 75.2 729.7 2009 357.3 56.6 73.057.Un-Levered Free Cash Flows: NOPAT Plus: Depreciation & Amortization Less: Changes in Working Capital Less: Capital Expenditures Un-Levered Free Cash Flow 2008 285.038.7 66.4 2012 674.0 32.0 36.6 925.5 357.051.9 1.5 59.4 79.2 65.666.2 295.164.9 Value of Operating Assets 9.0 485.2 533.7 757.2 846.5 33.9 ### .6 273.718.5 421.5 28.2 2010 454.5 1.0 653.3 925.6 1.708.6 Interest Tax Shields PV of Interest Tax Shields 284.3 39.0 47.3 2011 574. 0506 570 2012 1.5 76.3 215.8 1.183.0% 167.8 52.00 939 939 0.0% 191.30 859 258 0.0% 12.0506 387 2011 1.2% 30.0% 20.0% 22.70 911 638 0.2 236.266.0506 704 2009 2010 2011 2012 956.50 885 442 0.3 20.Wireless Business Subscribers: Average Monthly Subscribers (in MM's) Average Monthly Minutes Total Monthly Minutes Revenue Per Minute Annual Business Revenue Increase Backhaul Savings: System Operating Expenses Backhaul Percentage Estimated Backhaul Costs Reduction in Backhaul Costs Backhaul Savings 2008 0.4 25.0 2009 0.0% 20.0% 20.0506 269 2010 0.7 253.0506 156 2008 838.20 967 1.9 20.4 1.160 0.075.3 7.0% 0.0% 13.8 0.3 1.0 . . . #REF! . 554 46 12 29 2.227 57 10 31 2.029 29 14 27 3.758 120 17 24 3.726 40 12 28 2.214 22 15 26 3.542 9 16 25 3.612 44 12 29 2.734 1 17 24 3.166 59 10 2.239 21 15 26 3.443 13 16 25 3.517 10 16 25 3.838 36 13 28 2.590 7 16 24 3.566 8 16 24 3.317 18 15 26 3.291 19 15 26 3.50% 2.176 Annual Amortization Interest Principal Balance Period 5.698 84 12 28 2.082 27 14 27 3.342 17 15 25 3.437 50 11 30 2.265 20 15 26 3.196 58 10 31 2.348 53 11 30 2.468 12 16 25 3.002 30 14 27 2.188 23 15 26 3.Date: 1/31/2008 2/28/2008 3/31/2008 4/30/2008 5/31/2008 6/30/2008 7/31/2008 8/31/2008 9/30/2008 ### ### ### 1/31/2009 2/28/2009 3/31/2009 4/30/2009 5/31/2009 6/30/2009 7/31/2009 8/31/2009 9/30/2009 ### ### ### 1/31/2010 2/28/2010 3/31/2010 4/30/2010 5/31/2010 6/30/2010 7/31/2010 8/31/2010 9/30/2010 ### ### ### 1/31/2011 2/28/2011 3/31/2011 4/30/2011 5/31/2011 Payment 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 Annual Amortization Interest Principal Balance Period 5.975 31 14 27 2.393 15 16 25 3.492 11 16 25 3.641 43 12 29 2.318 54 11 30 2.865 35 13 28 2.367 16 15 25 3.288 55 10 30 2.166 0 60 .257 56 10 30 2.948 32 14 27 2.615 6 17 24 3.109 26 14 27 3.525 47 12 29 2.920 33 13 27 2.418 14 16 25 3.496 48 11 29 2.467 49 11 29 2.639 5 17 24 3.663 4 17 24 3.782 38 13 28 2.754 39 13 28 2.161 24 14 26 3.583 45 12 29 2.687 3 17 24 3.669 42 12 29 2.893 34 13 28 2.698 41 Date: 6/30/2011 7/31/2011 8/31/2011 9/30/2011 ### ### ### 1/31/2012 2/28/2012 3/31/2012 4/30/2012 5/31/2012 6/30/2012 7/31/2012 8/31/2012 9/30/2012 ### ### ### Payment 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 41 2.135 25 14 26 3.710 2 17 24 3.408 51 11 30 2.378 52 11 30 2.50% 3.810 37 13 28 2.055 28 14 27 3. #REF! . 6 20.147.6 4. EBIT Growth Rate 2012 674.1 674.4% .3% 141.Long-Term Growth Rate: NOPAT Invested Capital ROC Net Reinvestment NOPAT Reinvestment Rate Est.9% 3.3 16. #REF! .