Implications on Valuation (of Technological Change) Jerome C. - PDF document

TFI Valuation Conference January 24, 2013 Implications on Valuation (of Technological Change) Jerome C. Weinert, PE ASA, CDP AUS Consultants E ‐ Mail: weinertj@auswest.net Presented at TFI Communication Technology Asset Valuation Conference Jan 24-25, 2013 Please contact Mr. Weinert or TFI regarding reproducing presentation material. 1

Impacts on Value of Transmission Technology • Cost of Replacement (COR) – Increases in Opto ‐ Electronics Capacity reduces the need Increases in Opto Electronics Capacity reduces the need for fiber infrastructure. – Reduces the Replacement Cost of Equipment when compared to Historical Equipment Cost. • COR less Depreciation – Rapidly changing opto ‐ electronics systems and their capacity reduce the life of current and historical systems. capacity reduce the life of current and historical systems. • Economic Obsolescence – Requires less individual opto ‐ electronic systems which reduces operating cost. Presented at TFI Communication Technology Asset Valuation Conference Jan 24-25, 2013 Please contact Mr. Weinert or TFI regarding reproducing presentation material. 2

Presented at TFI Communication Technology Asset Valuation Conference Jan 24-25, 2013 Please contact Mr. Weinert or TFI regarding reproducing presentation material. 3

Economic Obsolescence • Declining Revenues – Increases in Opto ‐ Electronics Capacity produced vast Increases in Opto Electronics Capacity produced vast capacity which reduced the prices carriers charged customer resulting in declining revenues. • Operating Cost remain firm – Inter ‐ city networks being vast are cost intensive and those cost are relatively fixed • Declining Income – As a result net incomes are declining and many are in fact negative Presented at TFI Communication Technology Asset Valuation Conference Jan 24-25, 2013 Please contact Mr. Weinert or TFI regarding reproducing presentation material. 4