Capital recycling involves divesting certain non-strategic businesses and infrastructure assets, and setting aside part or all the proceeds for alternative projects. The key challenge is to accurately identify existing high value and poorly performing investments, and understand the potential risks of putting the capital into new ventures, which could fail to deliver expected returns and required cash flows.
According to the respondents to KPMG’s 2015 global survey:
Releasing non-strategic capital
Recycling of non-strategic or underperforming businesses and assets is an important source of funding, generating additional money to invest in more strategic areas, or reducing cash outflows.
Controlling the allocation of project underspend
Once capital has been allocated to telecom business units for specific projects, it is important to monitor how it is spent, to ensure it delivers the planned business benefits.