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Real Options at Bell Canada

In this report, we first develop a simplified example that illustrates the importance of considering the option ``waiting to invest'' when valuing an investment. This is followed by a short description of other options that could be embedded in an investment opportunity. In order to stress the importance of the real option mind-set in strategic planning and competitive assessment, we present three examples of possible applications of real options for evaluating investments at Bell Canada. A brief discussion follows on the importance of a real options mind-set in the telecommunications regulation context. Finally we conclude by underlining the importance of an efficient information gathering and processing framework to implement a real options framework. Two technical appendices provide more details on both the modeling and the solving techniques that are commonly used to implement real options.

The complete version of this publication is confidential.

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