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The Challenge

A Western European investment consortium was asked to invest in two cellular companies in two North African countries. The consortium had relationships with the current owners, but did not have an understanding of the quality of the management teams and telecom operations in these two companies. The consortium also needed an evaluation of the growth prospects and risk in these markets, and a commentary on the deal terms being proposed.

The Solution

In order to decide whether to make an expression of interest which would lead to a thorough analysis, the consortium decided to have a small team of experienced telecom professionals make a quick assessment of the management teams and their operations. The consortium considered this to be “preliminary due diligence.” Recognizing that TEG is experienced in telecom mergers and acquisitions as well as operations, the consortium assigned TEG to assess market growth prospects, risk and deal terms, in addition to operations and management.

The Results

TEG provided a comprehensive report within the timetable defined by the consortium. The report was based on management interviews, site visits, review of market research and other company documents, discussions with international sources regarding the risk level in these countries, and reference to international risk assessment services.

For each country/company, the report
- summarized the business plan
- analyzed the market and made a growth projection
- described and evaluated company operations: network, products, pricing, distribution channels, handset strategy, support systems, operational processes, finance processes, human resources, business plan
- identified opportunities for operational improvements
- assessed management: organization, experience, priorities, decision-making, communications, culture
- provided a SWOT summary (strengths, weaknesses, opportunities, threats)
- identified unanswered questions or risks that warranted further due diligence

In addition, the report defined the current financial situation for each company, explained the deal structure and steps to completion, and evaluated the minority shareowner rights and exit strategies offered.

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