John Scrivner wrote:
From a resell standpoint, at that moment in time, your company could
well be worth less than what you paid to build it. It is just like
driving a car off the lot. It depreciates thousands of dollars the
first few feet off the lot.
CLEC's are a great example of not getting back what you paid for it.
Look at GX or Nuvox. Nuvox has $1B invested. $1B. They do $300M in
revenue. No one is gonna pay $1B for it.
A perfect example is L3 buying Progress for "Under the terms of the
agreement, Level 3 expects to pay total consideration of $137 million,
consisting of $68.5 million in unregistered shares of Level 3 Common
Stock and $68.5 million in cash." Progress has 9000 miles of fiber. They
own that fiber, not IRU's or leased, but routed miles of fiber and
conduit. Progress had about $20M in revenue. So they got 3.4x ARC, but
did NOT get back the investment in 9000 miles of fiber.
It is unlikely that any company can sell and recoup the cost of the
network build out. You would need to have a network that is packed with
revenue from multi-year contracted businesses, IMO.
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