Manish, William, & Sarah

CURRENT HOLDINGS SUGGESTED HOLDINGS

AT&T 0% Verizon 0% China Mobile Ltd.

2.41% NII Holdings 0.98%

• Buy: AT&T 2.14% NII Holdings 0.27%

• Sell China Mobile Ltd.

2.41%

Smallest company of the three with a market cap of 3.93B

Competes in a foreign, niche market in South and Latin America

Has a high beta of 2.02 and behaves more like a growth stock

Is a young company with limited historical data.

Growth: Credit: History:

• Spin off of Nextel• Rapid growth in Latin

and Central America• Downturn in profits

associated w/unemployment and Mexico problems (N1H1, drug trafficking decreased tourism)

2009 2010 2011

Projected Sales 5.27B 4.80B 4.20B Projected Earnings 350M 320M 250M

2006 2007 2008

ROE 2.7 3.2GPM 72% 72% 73%

Valuation measures:• Historical price ratios—the ratios have currently

contracted, most likely due to the economy• Future valuations—as the economy improves, the

ratios should expand Relative to the industry and S&P 500

• The ratios have contracted Target price: $33.86 Major determinants of value: operating

margin on service revenues, depreciation expense and capital expenditures

Relative to Industry

High Low Median Current Target Multiple

Target E, S, B, etc/Share

Target Price

P/Trailing E 3.2 0.15 1.4 0.19

P/Forward E 2.2 0.04 1.3 0.04

P/B 7.9 1.3 4.4 1.5

P/S 3.3 0.9 2.0 1.1

P/CF 5.7 1.2 2.7 1.5

EntValue/EBITDA

4.10 1.06 2.67 1.28

P/Trailing E 3.2 0.53 2.0 0.63

P/Forward E 2.3 0.60 1.4 0.62

P/B 4.7 0.8 2.9 0.8

P/S 3.4 0.8 2.1 0.8

P/CF 3.0 0.4 1.7 0.5

EntValue/EBITDA

2.92 0.55 1.89 0.67

P/Forward E 34.3 6.7 22.5 9.3 15.9 2.5 40.30

P/S 5.4 0.5 3.2 0.7 2.0 33.7 65.66

P/B 14.4 1.2 8.3 1.7 5.0 13.9 69.32

P/EBITDA 20.38 1.98 12.82 2.95 7.9 8.0 63.00

P/CF 32.8 2.8 18.7 4.1 11.4 5.7 65.54

Buy 0.27% of NIHD to bring the holding up to 1.25% of the total SIM

Primary catalysts• Valuation: 80%/20% DCF/Valuation model

gives a 1 year target price of $33.86 Risks:

• Double Dip recession (high beta)• Political uncertainty

China Mobile provides a wide variety of mobile communication services in 31 provinces in China

Largest wireless provider in the world by customer

In January 2009, the company started offering 3G services

Beta: .91

Sell 2.41% of CHL Primary Catalyst: successful 3G

network Risks:

• High penetration rate• Strong competition in Chinese market• Market in certain large cities showing signs

of maturity• iPhone?? Potential deal between Apple and

China Unicom (competitor of China Mobile)

Largest telecom company in US ( Market cap $147.68 billion)

Best brand in Telecom - Ranked no. 1 company in telecom sector by fortune magazine (11 times in last 14 years)

Business Segmentation• Wireline Services – Voice and Data (55% of total

revenues)• Wireless Communications and Services (39% of total

revenues)• Advertising and publishing (4% of total revenues)• Other Segment (2% of total revenues)

Major competitors - Verizon, Sprint Nextel Corp. and T-mobile USA, Inc.

($MM) 2008 2007 2006 2005 2004 Trend

Revenue $124,028 $118,928 $63,055 $43,848 $40,733 Up

Net Income $12,867 $11,951 $7,356 $4,870 $4,487 Up

EPS 2.17 1.95 1.89 1.42 1.78 Up

Total Assets$265,24

5 $275,64

4 $270,63

4 $145,63

2 $110,26

5 Up

Dividend 1.61 1.47 1.35 1.3 1.26 Up

Capital Expenditure per year

$0

$5,000

$10,000

$15,000

$20,000

$25,000

2008 2007 2006 2005 2004

Current Price $24.45Implied equity value/share $36.27Target Price $26.99Upside to DCF 48.35%

Discount Rate

Terminal Growth Rate

9.5 10 10.5 11 11.5 12 12.5

2.5 40.23 37.46 35.03 32.88 30.98 29.28 27.75

3 42.02 38.94 36.27 33.94 31.88 30.06 28.42

3.5 44.09 40.65 37.69 35.13 32.90 30.92 29.17

4 46.55 42.64 39.33 36.50 34.04 31.89 30.00

4.5 49.50 45.00 41.25 38.08 35.35 33.00 30.93

5 53.10 47.83 43.51 39.91 36.87 34.26 31.99

5.5 57.60 51.29 46.23 42.09 38.63 35.71 33.20

Absolute Valuation

Median Current #Your Target Multiple

*Your Target E, S, B, etc/Share

Your Target Price (F x G)

P/Forward E 16.0 8.5 12.5 2.01 25.13

P/S 2.1 1.1 1.3 21.82 28.37

P/B 2.2 1.5 1.7 16.27 27.66

P/EBITDA 5.23 2.89 3.4 8.46 28.76

P/CF 6.7 3.9 4 6.27 25.08

Buy 2.14% of AT&T • Primary catalysts

Valuation: 80%/20% DCF/Valuation model gives a 1 year target price of $34.14

Brand name, Market Cap and ability to form alliance- (Apple iPhone 3G)

Pros:• 2008 annual report marked

Consolidated revenues up by more than 4 percent to $124 billion in year.

Reported earnings per share grew by 11.3 percent to $2.16 per share.

Returned $15.6 billion to stockholders through dividends and share repurchases.

Delivered strong cash flow - 25th consecutive year of dividend growth

Cons:• Slow growth due to cut throat competition and worsening economy

Buy AT&T (2.14%)• Very large upside, largest telecom company

in the US Buy NII Holdings (0.27%)

• Niche market, upside. Sell China Mobile (2.41%)

• Reaching its maturity, small downside, increasing competition