Publications
Publications
- April 2005 (Revised March 2006)
- HBS Case Collection
RTY Telecom: Network Expansion
Abstract
Requires real option analysis to analyze a capital expenditure decision by a large regional telecommunications firm. The firm needs to add network capacity for its broadband offering and is trying to decide on how to do this. One approach is simply to purchase this capacity in the spot market, whereas another approach is to buy an expensive piece of equipment from Nortel Networks. The protagonist tries to do an NPV analysis of this equipment. The specific way the equipment functions gives the firm a portfolio of real options on broadband capacity. Therefore, to do the NPV analysis correctly, the protagonist must identify the real options and determine how to value them.
Keywords
Citation
Chacko, George C., Vincent Dessain, Christopher Smith, and Anders Sjoman. "RTY Telecom: Network Expansion." Harvard Business School Case 205-102, April 2005. (Revised March 2006.)