PwC to telcos: focus on RoI

PwC tells telcos to focus on RoI in its new report 'Capex is king: A new playbook for telecoms execs'.

It provides a clever ranking of telcos, based on IRR and WACC. The winners, 'Value Leaders', have the highest share price CAGR & investor return. They had Capital Value turn positive during the last 3-5 years. "Investors reliably reward such behaviour with superior EBITDA multiples."

PwC's lessons for telcos:

1. Growth is gone and it’s not coming back.
2. Focusing on EBITDA and cash does not equate to focusing on value. Your investors know that already, so there is no premium multiple for directly pursuing those objectives.
3. The key to premium EBITDA multiples has been hiding in plain sight: delivering on the ROI that flows from economies of scale originally promised to investors. Welcome to capital value.

"Delivering on the capex agenda is conceptually simple, but it is not easy to implement, and it puts pressure on execs to have better answers to tough questions."