Valuation of Service Companies with Intangible Assets (PDF)

Master's Thesis from the year 2015 in the subject Business economics - Investment and Finance, grade: 65%, International Business School Budapest , language: English, abstract: The thesis addresses the issue of the valuation of service companies which have a large amount of intangible assets in their balance sheet. The problem of these assets are that it is not clear on the first view if and to what degree they are contributing to the company's revenue and growth. This issue is discussed in the thesis with the example of Deutsche Telekom which consists to almost 40% of intangible assets. The telecom industry is presented with its trends and developments. Additionally a Porter's five forces analysis is conducted to grant a greater overview over the industry.
The Deutsche Telekom is presented by showing the structure, key financial data, strategy, forecast and the IPO of 1996.
A discounted cash flow valuation resulting in a free cash flow to firm and a dividend discount model is used for Deutsche Telekom. Additionally the competitors AT&T and Vodafone are compared to Deutsche Telekom in the context of a financial ratio analysis and a relative valuation. The relative valuation uses the multiples PE ratio, EV/EBITDA, EV/S, P/BV and P/CF.
The thesis closes with a conclusion with the connection to intangible assets to valuation.