Tag Archives: corporate finance

Telstra and the National Broadband Network

IF you believe mainstream media, Sol Trujillo is the most unpopular man in Australia and Telstra is the most unpopular company [full disclosure: I am the beneficiary of a Telstra shareholding]. I don’t think I’ve ever forgiven Telstra for its monopolistic behaviour back when it was Telecom and I didn’t have a choice of carriers.

When Telstra was booted out of the National Broadband Network tender process for submitting a non-compliant tender, pundits were eagerly predicting Telstra’s demise or other “dark and awful consequences”. Telstra had submitted a tender that suited their business model, aspirations and view of the future. They signaled the only way they’d consider lining up for the $4.7 Billion AUD the government was offering. I congratulate them for having the balls to stick to their guns.

Today the Federal Government announced none of the remaining tenders were “value for money” and instead would form a new company to build a fibre to the home network to 90% of Australians. Much ink will be spilled in the future on this deviation from the tender outcomes requested, namely 98% fibre to the node.

Here’s my quick take home analysis:

  1. Submitting a tender of this size and complexity is a very expensive exercise.
  2. No tenderer was awarded a contract despite complying with the guidelines.
  3. Telstra spent a little money outlining the conditions they would accept.
  4. Who looks smart now?

This seems like a brilliant use of game theory by Telstra. Sol and his team have been called arrogant and out-of-touch, I think they protected their shareholders interests well.

Just because a deal is on the table doesn’t mean it’s always wisest to take it.

Calculate the Beta Coefficient of a stock

Beta CoefficientAs part of the Corporate Finance subject of my MBA we have to calculate the beta coefficient (aka Beta) of a company’s share price. The is applied economics and market mathematics, but it simply is a number which indicates how closely (or not) a company’s share price moves in relation to a broader market (or an index like the S&P ASX200 or the Dow Jones Industrial Average).

Anyway, part of the process is to create an excel format spreadsheet to aid with the calculation. I’ve done it and thought I share it with you. It will work with any spreadsheet program that can open .xls files

Update 1: 31 July 2009 the new version is available for testing by requesting it in a comment below. Once the testing is complete I’ll make it freely available to registered users.

Update 2: 7 July 2011 For a limited time you can get the Beta Coefficient Calculator without registering. Enter a valid email address in this form to receive a link to download the file. You’ll also get an email about new versions and bug fixes (with an opt-out link).

Update 3: 23 July 2011 If the form doesn’t work for you, please comment below and I’ll email it to you. The form is quicker but some people can’t get the download.

Enter your email address to download Beta Coefficient Calculator by Wealth Esteem

Version 0.9 beta_8
* Enabled automatic download via web form
* Added French and German to Translation tab (alpha code there)

Version 0.9 beta_7
* Fixed bug in date text description
* Updated sample data to 6 Jun 2011
* Changed sample data to BHP Billiton
* Made Instructions tab text translatable
* Cosmetic fixes

Version 0.9 beta_6
* Explained Translation tab in instructions and asked for volunteers
* Updated sample data to 2011
* Updated copyright date to 2011

Version 0.9 beta_5
* Added Change Log tab
* Moved text of index symbol & stock symbol to translation tab

Version 0.9 beta_4
* Added explanation of index and stock symbol fields on Beta Coefficient tab
* Updated copyright date to 2010

Version 0.9 beta_3
* Added email address to instructions tab

Version 0.9 beta_2
* Added logic to translate number of periods to a date range and show that range to users in Beta Coefficient tab at C11
* Swapped order of Security and Index tabs
* Fixed bug in coefficient calculation
* Introduced version numbering and control

Version 0.9 beta_1
* Updated instructions tab

Version 0.9 beta
* Initial public version

Support and feedback via the comments below.

MBA Term 2 course result

Wow I passed the Data Analysis and Statistical Modelling exam I wrote about in August. My term result was a solid Credit grade, so I didn’t do too badly given my inability to study for the exam.

One of Corporate Finance lecturers said my trade-off of limited study time for family and a new job was rational and utility-maximising 😀 Nice economist words those.

On with Corporate Finance which is mainly math. There is an optional workshop tomorrow for those who need to brush up on their high-school math skills.

Nicely the trick to this Corporate Finance course is not about the calculations. Any monkey can push buttons on a calculator or type numbers into excel. It’s knowing when and what kind of formulas apply to various similar problems when valuing a cash flow.

My inner geek is beaming again.

MBA 2008 Term 3

I’ll be doing Corporate Finance for my next MBA (Executive) course. This is interesting as I’ll be doing a few mergers and acquisitions so hopefully I’ll learn some interesting ways  to structure a deal. So far there hasn’t been a lot of M&A focused subjects at AGSM.

Lectures start the week beginning 15 September 2008.

I should be able to post more regularly now.