CTE CTE Financial Management & Budgeting

Question 1

In telecom capital planning, what is the key distinction between Capital Expenditure (CapEx) and Operating Expenditure (OpEx)?

Accepted Answer

CapEx is spending on long-term assets like towers and fiber; OpEx is ongoing costs like maintenance and leases

Answer

CapEx covers employee salaries; OpEx covers equipment purchases

Answer

CapEx is depreciated immediately; OpEx is amortized over 20 years

Answer

CapEx applies only to wireless networks; OpEx applies only to wireline

Question 2

A US telecom CFO presents a project with an NPV (Net Present Value) of $0. What does this indicate about the investment?

Accepted Answer

The project's discounted cash inflows exactly equal its initial investment cost, earning exactly the required rate of return

Answer

The project will generate no revenue

Answer

The project should be rejected outright

Answer

The project has no risk

Question 3

Which financial metric best measures how efficiently a telecom company converts revenue into profit, commonly used to compare carriers of different sizes?

Accepted Answer

EBITDA margin

Answer

Total revenue

Answer

Gross debt

Answer

Customer acquisition cost

Question 4

In a US carrier's financial model, what does Average Revenue Per User (ARPU) measure and why is it important?

Accepted Answer

The revenue generated per subscriber, used to track monetization trends and forecast future revenue

Answer

The total revenue divided by number of employees

Answer

The average cost to acquire a new customer

Answer

The total capital invested per cell site

Question 5

What is the purpose of a zero-based budgeting (ZBB) approach when a US telecom executive is tasked with restructuring operational costs?

Accepted Answer

Building every budget line from zero each cycle, requiring each expense to be justified from scratch

Answer

Carrying forward the prior year's budget with a 3% inflation adjustment

Answer

Eliminating all capital projects for one fiscal year

Answer

Setting budget targets based solely on competitor benchmarks

Question 6

A CTE is assessing the financial case for migrating from owned data center infrastructure to a public cloud model. Which financial benefit primarily drives this shift from a balance sheet perspective?

Accepted Answer

Converting capital expenditure to operating expenditure, improving balance sheet flexibility

Answer

Increased CapEx spending

Answer

Eliminating all IT staff immediately

Answer

Reducing spectrum acquisition costs