Business Valuation of Telefonica Czech Republic, a.s.

Business valuation is a scientific discipline, which covers several other areas. Each valuation represents an individual and very complex process. Business valuation shall be carried out on the basis of law requirement (e.g. in case of company transformations - fusion, division) or for other purposes (e.g. on the sale, purchase, introduction to the financial market, on the entry of a foreign capital, etc.). In this case, the subject of valuation was Telefonica Czech Republic, a.s. with its seat in Za Brumlovkou 266/2 Praha 4, Michle 140 22. This company is one of the world's leading integrated telecommunications operators that offer solutions in the field of communications, information and entertainment. The aim was to determine the market value of the company, or share capital of Telefonica Czech Republic, a.s., on December 31, 2011. The company was valued at the net business assets level, i.e. net worth. The net worth is defined in the Czech Commercial Code (Section 6, 3) as "business property reduced by liabilities incurred by an entrepreneur in the course of his business activity, if such entrepreneur is an individual (a natural person), or business property reduced by (all) liabilities, if such entrepreneur is a legal entity." This value is therefore the result of valuation at the level of an ownership interest. Methods applied in the research were: Two-stage DCF model at the level equity (income approach) and business enterprise valuation (market approach). The valuation was carried out on the basis of publicly available resources.