UNIVERSITY PARK, Pa. — This April, Matthew Cherry attended the TMT Finance M&A Forum USA in New York, which brought together international telecom executives with investment banks, private equity investors and advisers. The primary theme was 5G technology and its potential effects on mergers and acquisitions.
“It was probably 70% of the conference,” Cherry said.
Smeal College of Business and Schreyer Honors College alumnus Matthew Cherry. Credit: Photo provided. All Rights Reserved.
Cherry was very familiar with the topic. Only a few days before, the then-Penn State finance major and Schreyer Scholar had submitted his honors thesis, which offered a real-options approach to telecom investment decisions surrounding 5G.
Six months later, that research earned Cherry the Mark J. Bertus Prize for best paper/presentation at the Financial Management Association annual meeting in New Orleans, Louisiana, and will be published in the Journal of Undergraduate Research in Finance.
Cherry, who graduated with honors in finance from Penn State in May, examined the variety of new business models that could be brought about by the advent of 5G, which go well beyond just cellular phones, and whether telecom operators such as AT&T or Verizon would actually be able to generate returns above their cost of capital over the next decade as 5G networks are employed. His real-options framework and analysis would enable telecom operators to more accurately evaluate their investment decisions regarding 5G deployment and commercialization of new business models by accounting for the embedded optionality of their spectrum and infrastructure needs.
“Basically, what it comes down to is 5G is super-disruptive for telecom companies and a bunch of other industries, too,” he said. “Think about industrial applications with IoT (Internet of Things) or consumer applications with Fixed Wireless Access. You need to have the type of latency and bandwidth that 5G allows. Because it’s so disruptive, I felt that traditional NPV (Net Present Value) financial analysis was too static and didn’t really incorporate all the flexibility that goes into this decision.”
Cherry, who credits Smeal associate clinical professors Christoph Hinkelmann and Brian Davis for their guidance and support of his work, said his favorite part of the research was learning more about the telecom industry. Going to the conference — with the help of funding from the Schreyer Honors College, the Smeal College of Business, and Smeal Finance Department — and seeing that his work had hit on a widely discussed financial topic, and the thesis experience itself, were highlights as well.
“I didn’t write the thesis to get it published,” said Cherry, who is now a business analyst for Deloitte Consulting. “I thought it was just a really valuable thought process to own that big of an analysis over that long of a time period. Coming up with a point of view and being able to defend it is a great skill and transferrable to the workforce in a lot of jobs.”
About the Schreyer Honors College
The Schreyer Honors College promotes academic excellence with integrity, the building of a global perspective, and creation of opportunities for leadership and civic engagement. Schreyer Honors Scholars total more than 2,000 students at University Park and 20 Commonwealth Campuses.