Business case
Our client, a telecom operator, was granted several telecom licences in an Asian country and spent several years investing to build up the required infrastructure to launch its services. However, its licences were revoked before the full launch. Our client initiated ICSID arbitration proceedings against the country, alleging breach of the investment agreement.
Significant upfront investments are required in the telecom industry to build the operators’ infrastructure and network. At the date of the revocation, our client’s business was still in its infancy, with significant costs and capex incurred and yet a very limited subscriber base. Due to (i) the absence of forecasts prepared by our client and (ii) the early-stage nature of the business, the credibility of our valuation work depended heavily on our ability to prepare a reasonable set of forecasts in collaboration with an industry expert. Key parameters included achievable market share, additional capex required to finalise the infrastructure and normalised profitability levels.
We acted as an independent expert assessing the value of the telecom business but for the revocation of the licences. We submitted an expert report to the tribunal and worked jointly with an industry expert to refute arguments put forward by the opposing party’s expert.