Telecom Corp of New Zealand (TEL)

Discount cash flow analysis

Within margin of safety Undervalued by 0.0%

5% margin of safety What's this?

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How does this work?

This is an interactive analyst report for Telecom Corp of New Zealand, based on a discounted cash flow valuation approach.

You can modify the assumptions and the valuation will be updated automatically. You can also save and share your valuation.

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Values in $ millions
2009 2010 2011 2012 2013 2014 2015 2016
 
                 
               
 

What will the revenues be in the future?

Growth beyond year three is driven by the terminal growth rate.

Sensitivity matrix

   
-1%
Discount Rate %
0%

1%
  -1% $2.74 $2.70 $2.67
Terminal Growth% 0 $2.74 $2.70 $2.67
  +1% $2.74 $2.70 $2.67

How does a change in discount rate or terminal growth affect valuation?

This table shows the sensitivity of the valuation to two key variables - the discount rate and the terminal growth rate

Valuations and comments

  • GordonGekko created a new valuation of $2.19 (undervalued by 14.66%) - 7 years ago
  • GordonGekko created a new valuation of $2.34 (undervalued by 4.46%) - 7 years ago
  • GordonGekko created a new valuation of $2.70 (undervalued by 20.54%) - over 7 years ago
  • GordonGekko created a new valuation of $2.78 (undervalued by 20.87%) - over 7 years ago
  • BrendonDCFV created a new valuation of $1.45 (overvalued by 36.96%) - over 7 years ago
  • BrendonDCFV created a new valuation of $1.12 (overvalued by 51.3%) - over 7 years ago
  • BrendonDCFV created a new valuation of $2.51 (undervalued by 9.13%) - over 7 years ago
  • sambling created a new valuation of $2.93 (undervalued by 24.68%) - over 7 years ago
  • DarrylLundy created a new valuation of $2.54 (overvalued by 8.3%) - almost 8 years ago
  • GordonGekko created a new valuation of $2.96 (undervalued by 13.41%) - 8 years ago
  • GordonGekko created a new valuation of $2.69 (undervalued by 3.86%) - 8 years ago
  • SethWellbourne created a new valuation of $2.54 (undervalued by 9.48%) - 8 years ago
  • GordonGekko created a new valuation of $2.63 (undervalued by 11.91%) - over 8 years ago
  • nzvikram created a new valuation of $3.12 (undervalued by 24.8%) - over 8 years ago
  • nzvikram created a new valuation of $3.33 (undervalued by 33.2%) - over 8 years ago
  • KWH created a new valuation of $1.53 (overvalued by 32.6%) - over 8 years ago
  • botis created a new valuation of $1.45 (overvalued by 34.39%) - over 8 years ago
  • KiwiEMH created a new valuation of $2.52 (undervalued by 1.61%) - over 8 years ago
  • KiwiEMH created a new valuation of $2.58 (overvalued by 5.49%) - over 8 years ago
  • KiwiEMH created a new valuation of $2.82 (undervalued by 0.0%) - almost 9 years ago
  • Patricko created a new valuation of $1.37 (overvalued by 51.25%) - almost 9 years ago
  • KiwiEMH created a new valuation of $3.16 (overvalued by 0.94%) - almost 9 years ago
  • KiwiEMH created a new valuation of $3.12 (overvalued by 4.88%) - almost 9 years ago
  • GordonGekko created a new valuation of $2.98 (overvalued by 12.35%) - almost 9 years ago
  • KiwiEMH created a new valuation of $3.24 (overvalued by 11.96%) - almost 9 years ago
  • KiwiEMH created a new valuation of $3.43 (overvalued by 0.58%) - 9 years ago
  • TheCrunchBlog created a new valuation of $3.40 (overvalued by 8.85%) - 9 years ago
  • tiger created a new valuation of $3.25 (overvalued by 14.25%) - 9 years ago
  • GordonGekko created a new valuation of $4.00 (undervalued by 5.54%) - 9 years ago

Comments

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The boring details

All amounts in millions Figures
Enterprise Value: 0
Net Debt (Long-term borrowings less cash): 2,405
Equity Value: 4,171
Number of Shares Outstanding: 1,862,000,000
Calculated value per share: $2.70

Enterprise Value is the present value of the post-tax cash flows for a business into the future.


Calcuation of EV

Where:

  • C1, C2, C3 - the cash flow in period 1, 2, 3, ...
  • r - the discount rate

To capture the cash flows into the future a terminal value is calculated via a perpetuity calculation -
based on the final years forecast post-tax free cash flow.


Perpetuity

Where:

  • Cn - the cash flow in the final forecast period.
  • LTG - the long-term growth rate
  • r - the discount rate
  • g - the terminal growth rate

The Capital Asset Pricing Model (CAPM) is used to determine the equity component in the discount rate.


CAPM model

Where:

  • rt - the risk free rate
  • t - the tax rate
  • B - the beta of the company
  • MRP - the Market Risk Premium

Valuecruncher uses an estimate of Weighted Average Cost of Capital (WACC) to determine the discount rate in the calculation.