Valuation of spectrum to provide services in the 5G-era, where the combination of 5G, IoT, AI and Big Data and will transform entire industries, will be especially challenging.
A number of approaches are typically used, often in combination to provide a useful sense-check:
- Discounted Cash Flow (DCF) modelling – full business case
- Discounted Cash Flow (DCF) modelling – cost avoidance
- Benchmarks
The biggest risk with valuation is getting dragged into a level of detail which does not add value and gives a false indication of precision. The important thing is to identify the key assumptions and scenarios, supported through sensitivity analysis and frequent iteration. The most effective way of doing this is through scenarios and sensitivities.