Company Background
Open Range Communications is a broadband wireless Internet service provider that delivers wireless high-speed Internet and voice services to rural communities across America. Within the next five years, Open Range intends to serve over 500 communities, making its 4G wireless broadband network-based services available to approximately six million people. The company — founded in 2008 — is headquartered in Greenwood Village, Colorado.
The Challenge
The Open Range executive team initially retained The Brode Group to explore the strategic and financial impact of their business ideas. These discussions resulted in The Brode Group being tasked with leading an all-out push to get low-interest financing via a federal program to build rural wireless networks.
The Brode Group needed to rapidly construct a financial model that conformed to the arcane government reporting requirements while still having the economics work in economically marginal, under-served areas. Brode was to generate all of the analytic output needed to understand if the business worked, comprehend the dynamics of a WiMAX business, and create a reasonable forecast to satisfy the often conflicting needs of investors and government agencies.
The Solution
Brode provided key counsel in shaping the early strategic direction of the company. Bringing a dose of financial reality to early discussions meant the impact of different ideas and issues could be factored into the overall business plan as well as the government funding proposal.
The Brode Group then went about creating a viable financial model that captured the economic impact of all areas of the company and consolidated all that was known into an economic model of the company and the world around it. The only way to accomplish this while at the same time having a viable tool to explain the business was to build a piece of software that would include both spreadsheet and database components.
The deliverable: a fundable plan.
The Execution
The financial modeling software created by The Brode Group went through hundreds of versions and required thousands of inputs. Working with telco engineers, Brode distilled their complex discipline into a few simple formulas that could be applied to determine the cost of building the network. Brode worked endless variations with senior management on operational details (e.g. sales channel strategy) to find ways to cut costs and make the business viable.
Over two dozen people assisted in gathering information for the application, but in the end all of it had to be synthesized in a single financial model. To receive the government-backed loan, the company was required to produce an application explaining its financial results and operational metrics in incredible detail, e.g. the government required detailed capital plans for each of 1,000+ cities in which Open Range planned to offer service.
Government bureaucrats as well as private investors went through this model with a fine-toothed comb and could not find problems. As Brode worked with government employees to get them comfortable with the model and the application, a final application encompassing over 10,000 pages was the result. The government insisted on it all printed, and in triplicate: two handtruck loads were used to deliver the pages to Washington, D.C.
The Outcome
The Brode plan worked: the deal closed in January 2009. Under its terms, Open Range Communications received $100 million in private equity and $267 million in debt. They have since signed an agreement to purchase $100 million of telecommunications equipment.
What’s Next
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