TMT (Tech, Media & Telecom)
Why is EBITDA minus capex the standard FCF proxy in telecom, and how does the math work for a carrier with $100 of revenue, a 40% EBITDA margin, and capex at 18% of revenue?
Model answer
Telecom is capital-intensive - carriers perpetually spend on network build, upgrades, and maintenance, with capex commonly running 15-20% of revenue - so EBITDA alone wildly overstates cash…
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