Proportionate

Mobile telecoms companies frequently disclose a substantial amount of information on a proportionate basis.

Proportionate numbers do not fully consolidate subsidiaries', but instead include each subsidiary's and associate's numbers in proportion to the group shareholding in them.

For example, if a group has a total turnover of £100m from fully owned subsidiaries and another £50m from a subsidiary in which it has a 50% stake the group's total proportionate turnover is:

£100m + (£50m × 50%) = £125m

Mobile telecoms companies frequently disclose proportionate turnover, proportionate customer numbers and usually some proportionate profit numbers (proportionate EBITDA is common).

This is a very useful in many ways. It simplifies the calculation of EV/EBITDA as the EV does not need the usual adjustments for the hypothetical buyout or sale of minority shareholdings if proportionate EBITDA is used.

Although there is no reason why proportionate numbers should be only be disclosed by telecoms companies, they are rarely disclosed outside the sector. It has become a standard in the sector because of investor demand for sufficient disclosure to value shares in companies that generate such a high proportion of profits from partly owned subsidiaries and associates.

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