Wireless Spectrum License Valuation
Wireless spectrum licenses are a critical asset to many companies in the communications sector. Understanding the intricacies of spectrum value is critical to understanding the value and strategic options of many of the players in the communications sector - from investors to private wireless operators to federal spectrum users. Moreover, spectrum licenses are in intangible assets that are heavily regulated in almost every country and do not convey actual property rights to the underlying spectrum. As such, it is crucial for an appraiser to fully understand the regulatory nuances of the subject licenses they are valuing.
Experienced Wireless Spectrum Valuation Experts
Summit Ridge Group has particular expertise in valuing complex wireless spectrum licenses (including FCC licenses). We frequently perform wireless spectrum valuation projects in conjunction with our litigation support/expert witness services. Summit Ridge Group hands-on experience in valuing spectrum licenses and providing related competitive and regulatory analysis for clients worldwide. We have advised carriers, investors, and government agencies. Our expertise ranges from High Frequency (which at 3-30 MHz, is actually at the low end of the usable radio frequency spectrum) to the Ka-band satellite (18-20 GHz and 28-30 GHz) as well as numerous mobile wireless licenses around the world in significant spectrum bands. In particular, we have experience valuing FCC spectrum licenses in the following spectrum bands: VHF, 600 MHz, 700 MHz, 900 MHz, L-band (satellite), AWS(1-3), PCS, S-band (satellite), EBS/BRS, CBRS, C-band, Ku-band (satellite), Ka-band (satellite), and mmWave bands. Our clients include investors, wireless and satellite operators, parties in litigation, and federal government agencies. In addition to our practical experience, we have authored publications related to wireless spectrum valuation in major academic journals. Organizers of leading industry conferences regularly invited invite us to present on the topic of spectrum valuation. We keep current on significant regulatory developments at the FCC and other regulatory agencies globally.
Wireless Spectrum Valuation Process
Wireless spectrum is one of the few types of intangible assets that can be valued based on market comparables. Mobile broadband licenses, in particular, have a relatively well-developed market with many comparable transactions. In some cases, however, comparable transactions are not available, and appraisers must look to alternative valuation methodologies including:
- Discounted cash flow analysis based on the expected profitability of the underlying business
- Theoretical royalty imputation
- Excess earnings methods
- Optimal deprivation analysis
- Other substitution calculations
Econometric modeling (statistical relationships between several explanatory variables)
Theoretically, each method should yield the same result. But due to incomplete information, alternatives to market comparables usually require major, hard to support assumptions. Incomplete information leaves econometric modeling, in most cases, materially inferior to an analysis of market comparables (adjusted for differences between the comparables and the subject asset - a complex process itself).
For more information about our wireless spectrum valuation process, see our wireless spectrum valuation framework presentation as well as other articles and presentation on our expertise page and blog.