AIRTHREAD ACQUISITION Operating Assumptions

Revenue Projections: 2008 2009 2010 2011 2012

Service Revenue 4,194.3 4,781.5 5,379.2 5,917.2 6,331.4
Service Revenue Growth 14.0% 14.0% 12.5% 10.0% 7.0%

Equipment Revenue 314.8 358.8 403.7 444.1 475.2

Equipment Revenue/Service Revenue (1) 7.5% 7.5% 7.5% 7.5% 7.5%

Operating Expenses:
System Operating Expenses 838.9 956.3 1,075.8 1,183.4 1,266.3
System Operating Exp./Service Revenue 20.0% 20.0% 20.0% 20.0% 20.0%

Cost of Equipment Sold 755.5 861.2 968.9 1,065.8 1,140.4

Equipment COGS 240.0% 240.0% 240.0% 240.0% 240.0%

Selling, General & Administrative 1,803.6 2,056.2 2,313.2 2,544.5 2,722.6

SG&A/Total Revenue 40.0% 40.0% 40.0% 40.0% 40.0%

Depreciation & Amortization 705.2 804.0 867.4 922.4 952.9

Tax Rate 40.0% 40.0% 40.0% 40.0% 40.0%

Working Capital Assumptions (1):

Accounts Receivable 41.67x 41.67x 41.67x 41.67x 41.67x
Days Sales Equip. Rev. 154.36x 154.36x 154.36x 154.36x 154.36x
Prepaid Expenses 1.38% 1.38% 1.38% 1.38% 1.38%
Accounts Payable 35.54x 35.54x 35.54x 35.54x 35.54x
Deferred Serv. Revenue 14.01x 14.01x 14.01x 14.01x 14.01x
Accrued Liabilities 6.85x 6.85x 6.85x 6.85x 6.85x

Capital Expenditures (2):

Capital Expenditures 631.3 719.7 867.4 970.1 1,055.0
Cap-x/Total Revenue 14.0% 14.0% 15.0% 15.3% 15.5%

Accounts Receivable ca 522 595 669 736 788

Days Sales Equip. Rev.ca 135 154 173 190 204
Prepaid Expenses ca 47 53 60 66 71
Accounts Payable cl 335 382 430 473 506
Deferred Serv. Revenucl 132 151 170 187 200
Accrued Liabilities cl 65 74 83 91 98
NWC 171 195 220 242 259
 58.6 24.01 24.44 21.99 16.94

(1) Based on a 360-day year. Days Payable, Deferred Service Revenue, and Days Accrued Liabilities are
based on total cash operating expenses.
(2) Includes investments in property, plant & equipment, as well as licenses and customer lists.

Harvard Business Publishing

AIRTHREAD ACQUISITION Licensing Agreemts

Total Consolidated Markets:

Region Population Customers Penetration
Central US 65,096 3,846 5.9%
Mid-Atlantic 11,677 1,180 10.1%
New England 2,830 518 18.3%
Northwest 2,287 431 18.8%
New York 481 147 30.6%
Total 82,371 6,122 7.4%

Total Operating Markets:

Region Population Customers Penetration
Central US 32,497 3,846 11.8%
Mid-Atlantic 7,346 1,180 16.1%
New England 2,344 518 22.1%
Northwest 2,287 431 18.8%
New York 481 147 30.6%
Total 44,955 6,122 13.6%
Harvard Business Publishing
AIRTHREAD ACQUISITION Customer Operating Data

Customer Data: 2005 2006 2007

Net Customer Additions 301 310 477
Cost Per Customer Addition 372 385 487
Cost of New Customer Additions 111,972 119,350 232,299

Cost of Equipment Sold/Equipment Revenue 251.3% 219.9% 239.8%

Monthly Churn Rate 2.1% 2.1% 1.7%

Revenue Per Minute 2005 2006 2007

Monthly ARPU 45.24 47.23 51.13
Customer Minutes Per Month 625 704 859
Revenue Per Minute 0.0724 0.0671 0.0595
Harvard Business Publishing
AIRTHREAD ACQUISITION Income Statement
Historical Operating Results

Operating Results: 2005 2006 2007

Service Revenue 2,827.0 3,214.4 3,679.2
Plus: Equipment Sales 203.7 258.7 267.0
Total Revenue 3,030.8 3,473.2 3,946.3
Less: System Operating Expenses 604.1 639.7 717.1
Less: Cost of Equipment Sold 511.9 568.9 640.2
Less: Selling, General & Administrative 1,217.7 1,399.6 1,555.6
EBITDA 697.0 865.0 1,033.3
Less: Depreciation & Amortization 490.1 555.5 582.3
EBIT 206.9 309.5 451.1
Less: Interest Expense 84.9 93.7 84.7
Plus: Equity in Earnings of Affiliates 66.7 93.1 90.0
Plus: Gains (Losses) on Investments 18.1 50.8 83.1
Plus: Other Income 54.5 (46.6) 7.0
EBT 261.3 313.1 546.5
Less: Taxes 95.9 120.6 216.7
Income Before Minority Interest 165.5 192.5 329.8
Less: Minority Interest 10.5 13.0 15.1
Net Income 155.0 179.5 314.7
Harvard Business Publishing
AIRTHREAD ACQUISITION Balance Sheet

Assets: 2005 2006 2007

Cash & Cash Equivalents 29.0 32.9 204.5
Marketable Securities 0.0 249.0 16.4
Accounts Receivable 362.4 407.4 435.5
Inventory 92.7 117.2 101.0
Prepaid Expenses 32.1 35.0 41.6
Deferred Taxes 8.2 0.0 18.6
Other Current Assets 15.5 13.4 16.2
Total Current Assets 539.9 854.9 833.8

Property, Plan & Equipment 2,553.0 2,628.8 2,595.1

Licenses 1,362.3 1,494.3 1,482.4
Customer Lists 47.6 26.2 15.4
Marketable Equity Securities 225.4 4.9 0.0
Investments in Affiliated Entities 172.1 150.3 157.7
Long Term Note Receivable 4.7 4.5 4.4
Goodwill 481.2 485.5 491.3
Other Long Term Assets 30.0 31.1 31.8
Total Assets 5,416.2 5,680.6 5,611.9

Liabilities & Owners' Equity:

Accounts Payable 254.1 254.9 260.8
Deferred Revenue & Deposits 111.4 123.3 143.4
Accrued Liabilities 42.9 47.8 59.2
Taxes Payable 36.7 26.9 43.1
Deferred Taxes 0.0 26.3 0.0
Note Payable 135.0 35.0 0.0
Forward Contract 0.0 159.9 0.0
Derivative Liability 0.0 88.8 0.0
Other Current Liabilities 82.6 93.7 97.7
Total Current Liabilities 662.7 856.7 604.2

Long Term Debt 1,001.4 1,001.8 1,002.3

Forward Contracts 159.9 0.0 0.0
Derivative Liability 25.8 0.0 0.0
Deferred Tax Liability 647.1 601.5 554.4
Asset Retirement Obligation 90.2 127.6 126.8
Other Deferred Liabilities 46.2 62.9 84.5

Minority Interest 41.9 36.7 43.4

Common Stock & Paid-In Capital 1,375.0 1,378.9 1,404.1
Retained Earnings 1,366.0 1,614.4 1,792.1
Total Liabilities & Owners' Equity 5,416.2 5,680.6 5,611.9
Harvard Business Publishing
AIRTHREAD ACQUISITION Amortization Schedule
Term Loan Amortization

Annual Amortization Annual Amortization

Payment Interest Principal Balance Period Payment Interest Principal Balance Period
Date: 41 5.50% 3,758 120 Date: 41 5.50% 2,698 84
1/31/2008 41 17.22 23.56 3,734 1
2/28/2008 41 17.11 23.67 3,710 2
3/31/2008 41 17.01 23.77 3,687 3
4/30/2008 41 16.90 23.88 3,663 4
5/31/2008 41 16.79 23.99 3,639 5
6/30/2008 41 16.68 24.10 3,615 6
7/31/2008 41 16.57 24.21 3,590 7
8/31/2008 41 16.46 24.32 3,566 8
9/30/2008 41 16.34 24.43 3,542 9
10/31/2008 41 16.23 24.55 3,517 10
11/30/2008 41 16.12 24.66 3,492 11
12/31/2008 41 16.01 24.77 3,468 12
1/31/2009 41 15.89 24.89 3,443 13
2/28/2009 41 15.78 25.00 3,418 14
3/31/2009 41 15.66 25.11 3,393 15
4/30/2009 41 15.55 25.23 3,367 16
5/31/2009 41 15.43 25.35 3,342 17
6/30/2009 41 15.32 25.46 3,317 18
7/31/2009 41 15.20 25.58 3,291 19
8/31/2009 41 15.08 25.70 3,265 20
9/30/2009 41 14.97 25.81 3,239 21
10/31/2009 41 14.85 25.93 3,214 22
11/30/2009 41 14.73 26.05 3,188 23
12/31/2009 41 14.61 26.17 3,161 24
1/31/2010 41 14.49 26.29 3,135 25
2/28/2010 41 14.37 26.41 3,109 26
3/31/2010 41 14.25 26.53 3,082 27
4/30/2010 41 14.13 26.65 3,055 28
5/31/2010 41 14.00 26.78 3,029 29
6/30/2010 41 13.88 26.90 3,002 30
7/31/2010 41 13.76 27.02 2,975 31
8/31/2010 41 13.63 27.14 2,948 32
9/30/2010 41 13.51 27.27 2,920 33
10/31/2010 41 13.38 27.39 2,893 34
11/30/2010 41 13.26 27.52 2,865 35
12/31/2010 41 13.13 27.65 2,838 36
1/31/2011 41 13.01 27.77 2,810 37
2/28/2011 41 12.88 27.90 2,782 38
3/31/2011 41 12.75 28.03 2,754 39
 4/30/2011 41 12.62 28.16 2,726 40
5/31/2011 41 12.49 28.29 2,698 41
6/30/2011 41 12.36 28.41 2,669 42
7/31/2011 41 12.23 28.55 2,641 43 Harvard Business Publishing
8/31/2011 41 12.10 28.68 2,612 44
9/30/2011 41 11.97 28.81 2,583 45
10/31/2011 41 11.84 28.94 2,554 46
11/30/2011 41 11.71 29.07 2,525 47
12/31/2011 41 11.57 29.21 2,496 48
1/31/2012 41 11.44 29.34 2,467 49
2/28/2012 41 11.31 29.47 2,437 50
3/31/2012 41 11.17 29.61 2,408 51
4/30/2012 41 11.03 29.74 2,378 52
5/31/2012 41 10.90 29.88 2,348 53
6/30/2012 41 10.76 30.02 2,318 54
7/31/2012 41 10.62 30.16 2,288 55
8/31/2012 41 10.49 30.29 2,257 56
9/30/2012 41 10.35 30.43 2,227 57
10/31/2012 41 10.21 30.57 2,196 58
11/30/2012 41 10.07 30.71 2,166 59
12/31/2012 2,176 9.93 2,165.76 0 60
Harvard Business Publishing
2007 EBITDA 1,033
Interest Coverage Ratio (EBITDA/Interest) 5
Interest Rate(per annum) 5.50%
Interest rate ( per month) 0.46%
Total Borrowing 3,758
Amortization Period 10 years
Payments per year 12
Corporate Tax 40%
AIRTHREAD ACQUISITION Wireless Comparables

Equity Net Debt/ Debt/ Equity Net

Comparable Companies: Market Value Debt Value Equity Beta1 Revenue EBIT EBITDA Income
Universal Mobile 118,497 69,130 36.8% 58.3% 0.86 43,882 11,795 16,949 3,794
Neuberger Wireless 189,470 79,351 29.5% 41.9% 0.89 42,684 7,020 14,099 4,103
Agile Connections 21,079 5,080 19.4% 24.1% 1.17 34,698 1,631 9,914 (30)
Big Country Communications 26,285 8,335 24.1% 31.7% 0.97 38,896 6,702 12,614 3,384
Rocky Mountain Wireless 7,360 3,268 30.7% 44.4% 1.13 4,064 510 1,028 240
Average 28.1% 40.1% 1.00

1) Equity betas were estimated on a weekly based on weekly stock returns over a three year period.
Note: The current industry and competitor leverage ratios reflect the historical averages that existed over the past three years.
Harvard Business Publishing
Income Statement Projections

Operating Results: 2008E 2009E 2010E 2011E 2012E

Service Revenue 4,194 4,782 5,379 5,917 6,331
Equipment Revenue 315 359 404 444 475
Synergy Related Business Revenue 156 269 387 570 704
Total Revenue 4,665 5,409 6,170 6,931 7,511
Less: System Operating Expenses 839 956 1,076 1,183 1,266
Plus: BackHaul Savings 0 (13) (26) (53) (76)
Less:Cost of Equipment Sold 755 861 969 1,066 1,140
Less: Selling, General & Administrative 1,866 2,164 2,468 2,772 3,004
EBITDA 1,205 1,442 1,683 1,962 2,176
Less: Depreciation & Amortization 705 804 867 922 953
EBIT 500 638 816 1,040 1,223
Less: Interest Expense 199 183 166 148 128
EBT 300 454 650 892 1,094
Taxes(40%) 120 182 260 357 438
Net Income 180 273 390 535 657

Unlevered Free Cash Flow

2008 2009 2010 2011 2012
NOPAT 300 383 489 624 734
plus: Depreciation and Amortization 705 804 867 922 953
less: Changes in Working Capital 66 33 33 37 28
Less: Capital Expenditures 653 757 925 1,057 1,164
Unlevered Free Cash Flows (FCFF) 286 397 398 453 494
Beginning Cash 205 81 62 37 59
I(1-T) 120 110 99 89 77
Principal Repaid 290 306 324 342 2,496
Ending Cash (FCFE) 81 62 37 59 (2,019) This is refinanced
 NON-Cash Working Capital
2007 2008 2009 2010 2011
Plus:Accounts Receivable 435 540 626 714 802
Plus:Inventory 101 135 154 173 190
Plus:Prepaid Expenses 42 48 55 62 69

Less:Accounts Payable 261 342 392 443 491

Less:Deferred Revenue & Deposi 143 135 154 175 193
This is refinanced Less:Accrued Liabilities 59 66 75 85 95
Net Working Capital 115 181 213 246 283
Change in Working Capital 66 33 33 37
2012
869
204
74

527
208
102
311
28
Balance Sheet Projections

Assets: 2007 2008E 2009E 2010E 2011E 2012E

Cash & Cash Equivalents 205 81 62 37 59 0
Marketable Securities 16 16 16 16 16 16
Accounts Receivable 435 540 626 714 802 869
Inventory 101 135 154 173 190 204
Prepaid Expenses 42 48 55 62 69 74
Deferred Taxes 19 19 19 19 19 19
Other Current Assets 16 16 16 16 16 16
Total Current Assets 834 855 948 1,037 1,172 1,198

Property, Plan & Equipment 2,595 2,543 2,496 2,554 2,689 2,900
Licenses 1,482 1,482 1,482 1,482 1,482 1,482
Customer Lists 15 15 15 15 15 15
Investments in Affiliated Entities 158 158 158 158 158 158
Long Term Note Receivable 4 4 4 4 4 4
Goodwill 491 491 491 491 491 491
Other Long Term Assets 32 32 32 32 32 32
Total Assets 5,612 5,581 5,627 5,775 6,044 6,281

Liabilities & Owners' Equity:

Accounts Payable 261 342 392 443 491 527
Deferred Revenue & Deposits 143 135 154 175 193 208
Accrued Liabilities 59 66 75 85 95 102
Taxes Payable 43 43 43 43 43 43
Other Current Liabilities 98 98 98 98 98 98
Total Current Liabilities 604 683 762 844 919 977

Long Term Debt 1,002 3,468 3,161 2,838 2,496 2,021

Deferred Tax Liability 554 554 554 554 554 554
Asset Retirement Obligation 127 127 127 127 127 127
Other Deferred Liabilities 85 85 85 85 85 85
Minority Interest 43 43 43 43 43 43
Total Equity 3,196 621 894 1,284 1,819 2,474
Total Liabilities & Owners' Equity 5,612 5,581 5,627 5,775 6,044 6,281
For Perpetuity Growth rate

Form Year 2012

Net CAP EX 211.217541
Deltha NWC 28.1404398
Net Reinvestment 239.357981
NOPAT 733.66
Reinvestment Rat 32.63%

EBIT 1222.75883
Corporate tax 40%
NOPAT 733.66
Invested Capital 6281.10
ROI 11.68%

Hurdle Rate 3.8%

 Valuation of the Firm using APV

2008E 2009E 2010E 2011E

NOPAT 299.7 382.5 489.4 623.8
Add:Depreciation 705.2 804.0 867.4 922.4
Less:CAPEX 66.0 32.5 33.1 36.5
Less: Change in NWC 653.1 757.3 925.5 1,057.0
Unlevered Cash Flow 285.9 396.6 398.2 452.6
Discount at Ka=8.33% 0.923 0.852 0.787 0.726
PV of unlevered Cash Flow 263.9 338.0 313.2 328.7
1,575.1
Terminal Value
Discounting at ka
PV of Terminal Value 7610.7
Interest Tax Shields 79.8 73.2 66.3 59.0
Discounting at Kd=5.5% 0.95 0.90 0.85 0.81
PV of ITS 75.6 65.8 56.5 47.6
284.8
Terminal Value of IT(Fin rule 2)
Terminal Value using WACC
Terminal Value using Ka

Termial value of ITS

Discount factor
PV of TV of ITS at Ka 517.06

Value of the Firm 9,987.6

 Debt WeightageEquity Weightage Debt/ValueDebt/EquityAsset Beta
0 1 0 0 0.82
28.10% 71.90% 28.10% 39.10% 0.82

2012E
733.7
952.9
28.1
1,164.1
494.3
0.670
331.3

11354.44
0.67

51.3
0.77
39.3

12076.536794
11304.412698

772.12409559
0.67
Equity BetaCost of Equity(ke)Cost of Debt(Kd)WACC
0.82 8.33% 5.50% 8.33%
1.14 9.92% 5.50% 8.06%

Assumptions
Marginal Taxrate 40%
Market risk premi 5%

Risk Free rate 4.25%

ka 8.35%
Equity Beta 1.14