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Company Presentation

Company Presentation. June 1, 2010 Jiying Wang YongHui Wu. Agenda. Recap of Recommendations Sector Summary NII Holding Analysis Verizon Analysis Conclusion . Recap of Recommendation. Increase SIM holding by 30 basis points to bring it to 4% Sell Verizon by 101 basis points

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Company Presentation

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  1. Company Presentation June 1, 2010 Jiying Wang YongHui Wu

  2. Agenda • Recap of Recommendations • Sector Summary • NII Holding Analysis • Verizon Analysis • Conclusion

  3. Recap of Recommendation • Increase SIM holding by 30 basis points to bring it to 4% • Sell Verizon by 101 basis points • Increase NIHD by 131 basis points

  4. Sector Summary

  5. SectorHoldings

  6. Target Prices

  7. NIHD Overview • Funded in 1995 as Nextel International, Inc. and changed its name to NII Holdings, Inc. in December 2001 • Providing fully integrated mobile communication services in selected Latin American markets • Currently operating in Argentina, Brazil, Mexico, Peru and Chile

  8. NIHD Business Analysis • Market Cap of $5.71b • High Beta of 2.09 • Company in growth phase • High growth rate • Heavily financed through debt • Possible factors to affect performance • Exchange rate • Interest rate

  9. NIHD Financial Analysis

  10. NIHD Financial Analysis

  11. NIHD DCF Analysis

  12. NIHD Sensitivity Analysis Discount rate = 10% Terminal growth rate =3%

  13. NIHD Valuation Analysis Average price = $60

  14. Potential Catalysts & Risks Catalysts Risks Exchange rates Possible double dip recession • Global economic recovery • Growth of emerging markets • Expansion of 3G markets

  15. Brazilian Real to USD

  16. Chilean Peso to USD

  17. Mexican Peso to USD

  18. Argentine Peso to USD

  19. Peruvian Nuevo Sol to USD

  20. Verizon Overview The largest mobile operator in the States. The second largest US-based telecom company. Two major business lines: • Domestic wireless Offer wireless voice and data products, and other value-added services, as well as sells equipment. • Wireline Provide voice, Internet access, broadband video and data, next generation Internet protocol (IP) network services, network access, and long distance services to consumers, carriers, businesses, and government customers.

  21. VZ Business Analysis • Market Cap of $77.79b • Beta: 0.62 • Company in mature phase • Slow growth rate of wireless unit • Wireline unit is slightly decreasing • Possible factors to affect performance • GDP growth • Consumer confidence • Unemployment rate • Interest rate

  22. VZ Financial Analysis

  23. VZ Financial Analysis

  24. VZ DCF Model

  25. VZ Sensitivity Analysis Discount rate = 9.5% Terminal growth rate =3%

  26. VZ Valuation Analysis Average price: $34

  27. VZ Summary Catalysts: • 4G Technology • Verizon iphone! • Risks: • Its Wireline unit declines year by year and offsets the benefits generated from Wireless unit. • Changes of regulation • Increased competition • Verizon’s financial performance is not very satisfactory.

  28. NIHD vs. VZ Five Year Stock Comparison

  29. Conclusion Verizon is a good stock but NIHD just performs better. So we decide to: • Sell Verizon (101 BP) • Buy NIHD (131 BP to 400 BP) • Total Telecom sector holdings – 400 BP (an increase of 30 BP)

  30. Q&A Any Questions? Thank you!

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