WACC SummaryMSM and Maa TV

September 10, 2012

Draft – For Discussion Only

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MSM / Maa TV WACCs

• Two valuations were completed as part of the MSM India minority buyout transaction, a DT valuation for internal approval and BSR (KPMG) valuation for RBI approval purposes

• These WACCs vary by 1.9%• This difference is largely driven by 1) the Beta estimates for each, and 2)

company-specific risks• Fortunately BSR’s WACC is the higher of the two, suggesting a lower

valuation and higher likelihood of approval by the Reserve Bank of India• The next page describes the difference between the two methods and

reasons for the 1.9% variance• The final page shows WACC calculations used for both MSM assignments

as well as the calculation used for Maa TV

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MSM WACCs

Deloitte BSRMSM MSM Impact

12.1%

Debt % 20.0% 22.9% -0.24%

Equity % 80.0% 77.1%

Tax Rate 33.3% 32.4% 0.02%

Risk Free Rate 8.3% 8.6% 0.24%

Market Premium 7.0% 7.3% 0.22%

Levered Beta for Equity 0.71 0.86 0.86%

Cost of Equity 13.2% 14.9%

Specific Company Risk 0.0% 1.0% 0.80%

Cost of Equity 13.2% 15.9%

Cost of Debt (pre tax) 11.3% 11.0% -0.03%

Tax Rate 33.3% 32.4%

Cost of Debt (post Tax) 7.5% 7.4% 13.96%

Cost of Debt 1.5% 1.7%

Cost of Equity 10.6% 12.3%

WACC 12.1% 13.96%

WACC (Rounded) 12.0% 14.0%

•Total difference between MSM and BSR is 1.9%•Two items make up 89% of the total difference

1) Levered b for Equity - 46% of the difference – BSR used Bloomberg, which includes two-year weekly returns as part of its calculation. DT calculated its beta from one-year daily returns. The longer the period used, the closer the b should be to the market (1). This is why the BSR b is higher than DT’s

2) Company-specific risk – 43% of the difference – BSR added 1% to the discount rate to compensate for the risk regarding the continuation of IPL at the end of the forecast. DT was comfortable with 0% since IPL will likely be replaced with something similar.

MSM and Maa TV WACC Comparison

• Most significant variance between Maa TV and MSM assignments is the cost of debt

During the Maa TV assignment, DT presented MSM management with a range of different costs of debt, noting that the lower end was the one that got the overall discount rate to make sense. Since Man Jit was comfortable that Maa could secure debt at 8.5%, this is what was used.

Firm Deloitte Deloitte BSRengagement Maa MSM MSM

Debt % 20% 20% 23%Equity % 80% 80% 77%Tax Rate 32.4% 33.3% 32.4%

Risk Free Rate 8.3% 8.3% 8.6%Market Premium 7.0% 7.0% 7.3%Levered Beta for Equity 0.73 0.71 0.86Cost of Equity 13.5% 13.2% 14.9%

Specific Company Risk 1% 0% 1%

Cost of Equity 14.5% 13.2% 15.9%

Cost of Debt (pre tax) 8.5% 11.3% 11.0%Tax Rate 32.4% 33.3% 32.4%Cost of Debt (post Tax) 5.7% 7.5% 7.4%

Cost of Debt 1.1% 1.5% 1.7%Cost of Equity 11.6% 10.6% 12.3%

WACC 12.7% 12.1% 13.96%

WACC (DT Rounded) 12.5% 12.0% 14.0%