Scott,
In assessing the overall value of its spectrum, CAI should have employed one or more qualified independent appraisers. Several come to mind: Paul Kagan Company, Hardin & Associates, Daniels & Associates or even GKM.
The spectrum valuation should be performed on a market by market basis and, as WTC points out, be based on a business case analysis reflecting prospective services and service revenues, appropriate time to market and competitive market share considerations, along with the complete operational cost structure. I also believe that values established in recent (and perhaps not so recent) transactions thru the sale of spectrum rights in comparable markets should be taken into consideration.
But for CAI to do its own spectrum valuation AND use the results of the LMDS auction as a baseline to assess the value of MMDS spectrum is TOTAL BS and an INSULT to all shareholders!!! How could CAI possibly think it could get away with that? And why would JP (who I respect as a fellow engineer) risk his reputation like that?
In its analysis, CAI points out the tradeoff between the larger block of LMDS spectrum and the smaller, but more efficient, block of MMDS spectrum. And that's fine... but this is clearly NOT an engineering design issue!
What we need is a fair, impartial assessment of the value of the spectrum that will be acceptable to both common shareholders and bondholders. To insist on anything else borders on being criminal. In the interest of a fair reorg plan, CAI's valuation of its most valuable asset, its spectrum rights, MUST be reassessed.
WTC said: At the end of the day, licensed spectrum is rationally worth a portion of the value creation it directly enables based on what management can figure out to do with it. Suitability to task is important to engineers, but product management, promotion, and sales are perhaps even more important to the success of a commercial venture.
This is exactly right! And only a Chapter 7 liquidation will determine what CAI's channel rights are really worth to anyone at that particular instant. Will the bondholders want to take that chance? Under the proposed reorg plan, the common shareholders would have absolutely nothing more to loose.
Zorro (no percentage from the movie) |
