Tilson has a sophisticated, multi-variable, proprietary financial model that can analyze the performance of a Fiber-to-the-Premise (FTTP) network under a variety of scenarios. This model examines the predicted capital cost, operating cost, cash-flow and financial return of a project given a set of key capital, operating, and revenue assumptions.

Tilson's financial model can accommodate a very wide range of potential situations and is customizable with client-specific information and criteria.

To customize the financial model for client use, we meet with you to discuss, review, and recommend key revenue, capital cost, operating cost, financing, and revenue assumptions that we will use for your project. As the modeling process is typically performed relatively early in as FTTP project, some of these assumptions may be subject to greater change over the life of the project, but you will also begin to get some early ideas about the impact of the choices that you are making that can have a significant effect on financial project performance. As part of the out of the box model, Tilson can also prepare a sensitivity analysis of the proposed FTTP network for key variables, as defined by the client. A sensitivity analysis would show how changing key selected inputs to the model affect overall project financial performance. Sensitivity analyses can pinpoint assumptions that need to be arrived at with greater accuracy due to their outsize impact on the subject project. The overall effect is to help focus project development efforts on understanding the assumptions that drive project financial performance to reduce adverse impacts of unforeseen circumstances.

Another application of Tilson's financial model is to create and examine financial performance under alternative sets of assumptions to the off the shelf financial model. This process may include additional sensitivity analyses and can be useful at an early stage to help make broad brush decisions about feasibility of proposals, or to make major decisions about how to structure the network's business model. It can also be useful during negotiations with ISPs to examine the impact of proposals and counter-proposals. Scenario generation will typically involve changes to multiple variables or assumptions in the model.

It is common that during the process of negotiating a partner agreement, or bidding out key services, the correct value for certain variables will begin to come more clearly into focus. Tilson can easily integrate updated variables into the financial model or an earlier scenario and change the relevant variables to produce an updated version of the application. This process can also be done as a "mini scenario" where there is not necessarily any new information about assumptions, but where you wish to see the impact of the change of a single key variable (for example, take rates, or the price of a key service).

Broadband Financial Modeling

by Tilson