Enabling Intelligent Spectrum Investing Through Valuation Profiles

Airwave valuation profiles were designed to make spectrum valuation easier. They are optimized for a diverse set of situations requiring valuation, ranging from acquisitions to distressed debt.

In this post, we discuss spectrum portfolio valuation and then describe valuation profiles and recent updates to this feature.

First, How Is Spectrum Portfolio Value Typically Calculated?

The value of spectrum assets is commonly calculated using the MHz-Pop metric, which multiplies the MHz-Pop of the spectrum by the $/MHz-Pop rate to get a dollar value. However, different spectrum bands have varying $/MHz-Pop rates, and these rates can also differ by market. For instance, the price rate in a high-density, high-income market like New York will likely be higher than in a less dense, lower-income market like Wyoming. Therefore, you need to break down the spectrum by both band and market, adjusting the $/MHz-Pop rate accordingly.

By multiplying the MHz-Pop in each band and market by the specific price for that combination and summing these values, you achieve a more accurate total value for the spectrum portfolio.

Performing this workflow for one band might be manageable, but it becomes increasingly complex as you add more bands and markets. This is where Airwave’s valuation profiles come in.

Introducing Valuation Profiles

A valuation profile is essentially a map that assigns user-defined prices ($/Meg-Pop) to different spectrum bands.

Using our profile editor, you can define a $/Meg-Pop price for each band, which will be used to value a portfolio. You also have the option to override the band-level price with a block-level price, which is useful when blocks vary significantly in value due to factors like impairments or adjacencies.

Then, when you use Airwave’s portfolio explorer, you can value a portfolio by electing which profile to use. You can make multiple profiles to explore various scenarios or conduct sensitivity analysis.

Some Recent Updates to Valuation Profiles

Market Indices For Accurate Price Adjustments

Using market indices is useful when comparing two different markets.

We’ve added two initial index presets: “Auction” and “Income”.

Auction indices are calculated by dividing the auction price for a specific frequency by the average price of that frequency. The auction are calculated for each frequency in the auction, over all markets.

You can apply an index to properly adjust the valuation profile. Because Mhz-Pops are distributed unequally across the country and this distribution differs by frequency, adjusting for markets across a whole portfolio previously required advanced analysis. It now takes just seconds.

More Concise Interface

We’ve updated our interface for editing profiles to be more concise. Block-level edits are now expandable with an indicator showing the number of blocks edited.

Updates Coming

We will be adding more presets and improving the customization options for market indices. Stay tuned for these enhancements in the coming weeks.