Telecom · Telecom / Mobile Operator
Auditing a Tier-1 Operator's 5G Capex Case Before Board Approval
An illustrative engagement: auditing a West African operator's multi-year 5G capex plan, running a Monte Carlo across FX, inflation and spectrum-fee risk, and giving the board a probability-weighted NPV instead of a single-point number.
Challenge
A Tier-1 operator across West Africa is preparing to commit a multi-year 5G roll-out. The internal case rests on a single deterministic NPV, a flat local-currency assumption, and a spectrum-fee schedule the regulator has already re-opened more than once. The CFO wants an independent read on how much of the headline NPV is real and how much is assumption.
Solution
We rebuild the model as a stochastic cash-flow engine. Every material driver — local-currency path, imported-equipment inflation, spectrum-fee renegotiation, tower-lease escalation, ARPU decay — is replaced with a distribution calibrated to a long window of local data. We run a Monte Carlo simulation and decompose the variance so the board can see which drivers dominate the downside. FX and regulatory-delay hedging instruments are priced against the exposures the simulation surfaces.
Results
The deterministic NPV collapses materially once probability-weighted, with a meaningfully negative left tail. Capex tranches are re-phased behind explicit FX and licence-renewal triggers, a partial hedge is put in place for the imported-equipment window, and the board approves a smaller year-one commitment with a documented re-underwrite point.
Future Applications
The same stochastic model becomes the operator's standing capex-approval tool for material commitments, and the variance-decomposition format is carried into board papers as the required view.
