My take is that the $350 cost to acquire a customer includes the discount in phone, sales commission, setup cost, etc. etc. Potential buyer of WCOM's wireless business must take into consideration of customer defect and cost to switch/setup. Also, a buyer will weight the option that, instead of being bought out, if WCOM is forced to close down the (money lossing) wireless resale business, it's customer will likely seek a different carrier. It may cost as little as $100 to attract a customer WCOM left behind. If on average, there're 5 carriers in each market, each carrier will get 400,000 of the 2 million WCOM customer. Here's how I will estimate the sale price:
conservative ($315 million):
1. Assume a 75% retention rate = 1.5 million customers.
2. Pay $100 per customer for the first 0.4 million customers = $40 million.
3. Pay $250 per customer for the rest 1.1 million customers = $275 million.
aggressive ($430 million):
1. assuming 85% retention rate = 1.7 million customers.
2. $100 per customer for the first 400,000 = $40 million
3. $300 per customer for the rest 1.3 million = $390
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