Investment decisions in mobile telecommunications networks applying real options

  title={Investment decisions in mobile telecommunications networks applying real options},
  author={Sergio Luis Franklin},
  journal={Annals of Operations Research},
  • S. Franklin
  • Published 1 March 2015
  • Computer Science, Economics
  • Annals of Operations Research
This paper proposes a real options model for valuing the option to delay mobile telecommunications network investment decisions and a method for calculating the real options’ impact on mobile service costs. Ranges of option value multiples are calculated for the decisions to invest in a number of network elements, each representing a different part of the mobile network, subject to different demand and technological uncertainties. The value of the option to invest in each network element, net… 
Model risk in real option valuation
We introduce a general decision-tree framework to value an option to invest/divest in a project, focusing on the model risk inherent in the assumptions made by standard real option valuation methods.
Real Options in Operations Research: A Review
Real options approach for fashionable and perishable products using stock loan with regime switching
The analyses show that a higher regime-switching rate leads to a higher value for the call option, while a lower increment rate on the exercise price allows the company to wait longer before exercising the option and thereby obtain a bigger profit.
Risk-adjusted valuation for real option decisions
Rivalry and uncertainty in complementary investments with dynamic market sharing
We study the effects of revenue and investment cost uncertainty, as well non-preemption duopoly competition, on the timing of investments in two complementary inputs, where either spillover-knowledge
When is it better to wait for a new version? Optimal replacement of an emerging technology under uncertainty
It is shown that, under a compulsive strategy, technological uncertainty has a non-monotonic impact on the optimal investment decision, and uncertainty regarding the availability of future versions may actually hasten investment.
Analysis on the Investment Decision of Infrastructure Project Based on Value Engineering
The construction of infrastructure projects promotes economic development and enhances people’s quality of life. Based on the theory of value engineering, this paper applies the analytic hierarchy
Optimal exit decision of venture capital under time-inconsistent preferences
This paper proposes two kinds of time-inconsistent preferences (i.e. time flow inconsistency and critical time point inconsistency) to further advance the research on the exit decision of venture
Exploring Strategies for Early Identification of Risks in Information Technology Projects
Exploring Strategies for Early Identification of Risks in Information Technology Projects by Nina Mack-Cain MBA, City University, 2001 BA, University of Wisconsin-Milwaukee, 1993 Doctoral Study


Real options and cost-based access pricing: Model and methodology
Valuing Real Options for Network Investment Decisions and Cost-Based Access Pricing
In this article, we propose a model and methodology for valuing the option to delay network investment decisions and calculating cost-based access prices. We model the value of the option to invest
The effect of sunk costs in telecommunications regulation
Under the Telecommunications Act of 1996, the FCC mandated forward looking cost-based prices for competitors to use unbundled local exchange company (LEC) facilities. The FCC does not permit any
The Value of Waiting to Invest
This paper studies the optimal timing of investment in an irreversible project where the benefits from the project and the investment cost follow continuous-time stochastic processes. The optimal
The New Investment Theory of Real Options and its Implication for Telecommunications Economics
The issue of costing and pricing in the telecommunications industry has been hotly debated for the last twenty years and we are still wrestling over the cost of the local exchange for access by
Pricing Capital Under Mandatory Unbundling and Facilities Sharing
The regulation of telecommunications, railroads, and other network industries has been based on mandatory unbundling and facilities sharing - entrants have the option to lease part or all of
LRIC Pricing, Dynamically Competitive Markets and Incentives to Invest in Telecommunications
The U.S. Telecommunications Act of 1996 outlines a "pro-competitive, de-regulatory national policy" for telecommunications. I While the Act is a general framework, it rests specifically on
A Multi-Criteria Game Theory and Real Options Model for Irreversible ICT Investment Decisions
The information and communication technology (ICT) industry is one of the most capital intensive among the high-technology industries. ICT business analysis, especially after the industry
ABSTRACT The introduction of uncertainty can make a significant difference in the valuation of a project. This manifests itself, inter alia, in the regulatory constraints that can affect the