• +91 6366 092 750
  • rickysaraf@hillpineconsulting.in
  • Georgia 30228, USA
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Investor Due Diligence on a Dark Fibre Provider’s Financial Model

A Private Equity investor was evaluating an acquisition opportunity in a dark fibre provider and needed a thorough review of the financial model prepared by the target company.

Our role was to validate the financial model, identify key risks and assumptions, and provide insights to support the investment decision.

Key sticking/ pain points:

  • Complex revenue streams: The dark fibre provider had a mix of long-term Independent Right of Use (IRU) contracts, wholesale lease agreements, and enterprise customer revenues.

  • Capex Intensity: Significant upfront capital expenditures and ongoing maintenance costs required a careful assessment of cash flow sustainability.

  • High model complexity: The financial model contained over 15,000 unique formulas, making it difficult to trace dependencies, validate assumptions, and ensure accurate projections

Hillpine’s value proposition

Our approach

  • Conducted a line-by-line review of the financial model to ensure logical consistency and formula accuracy.
  • Benchmarked key assumptions (pricing, growth rates, churn, and capex efficiency) against industry data and comparable transactions.
  • Assessed the impact of regulatory constraints on revenue growth and profitability.
  • Used automated tools to map and analyze dependencies within the 15,000 plus formulas to identify potential errors and redundancies.
  • Simplified model structures where possible and provided recommendations for better transparency in future iterations.

Outcome

  • Our analysis of the 15,000 plus formulas helped streamline the model, reducing complexity and improving accuracy.
  • Our review uncovered key areas where revenue projections were overly optimistic, leading to model adjustments that provided a more realistic outlook.
  • The investor gained a clearer understanding of potential risks and developed a structured approach to mitigate them.