Overview
A large family-owned conglomerate asked Butler Advisory to advise on a go/no-go decision for an important part of their portfolio. The company owned a struggling rural internet service provider business and needed to decide between divesting the company or investing in routing a fibre optic cable from the closest major city to their service area.
Methods
Discovery:
We worked with the client to collect as much relevant information as possible regarding the company’s financial situation, telecoms regulations and approvals required
Detailed Scenario Planning:
We created an extremely detailed set of strategic scenarios for the client. The team mapped out, at the town and neighbourhood level, what the additional incremental revenue and costs could be expected as the new cable traveled along potential routes from the major city to nearby towns and suburbs. A Monte Carlo simulation tool was used to create a distribution of potential outcomes best on the best available information for all relevant variables. An optimal go-forward scenario was identified.
Net Present Value Analysis:
After guiding the client towards an investment decision, we were engaged further to help secure the required capital financing. The team created a detailed net present value analysis and supporting documentation for the proposed investment, showing a strong positive rate of return and a relatively short payback period. The team facilitated communications between the client and a major financial institution to secure the necessary financing for the project.
Outcomes
- Secured $14,000,000 CAD in financing for the project
- The client used the go-to-market plan to successfully navigate regulatory, financial, and operational hurdles and complete the expansion
- The business has expanded into a multi-product suite of offerings and is now backed by a major telecommunications company
