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STRICTLY CONFIDENTIAL STRICTLY CONFIDENTIAL

Project White Rabbit Information Memorandum

April 2015 Carlyle

PAGE 1 STRICTLY CONFIDENTIAL MacquarieCapital

Purpose

This Information Memorandum (“IM”) has been prepared by Citycom Networks Private Limited and Ubico Networks Private Limited (“Company”) and Macquarie Capital Securities (India) Private Limited (“Macquarie”). The Company is providing the IM to the

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This IM does not in any way constitute an offer to sell or a solicitation of an offer to buy any securities. The provision of this IM to the Recipient is not, and should not be considered, a recommendation or solicitation in relation to the equity investment in the Company. Further, this IM does not purport to provide all the information that the Recipient may require in order to investigate the interests or the affairs of the Company and its operations.

The provision of this IM to the Recipient is subject to the confidentiality agreement between the Recipient and the Company. This IM may not be reproduced in whole or in part, nor may any of its contents be divulged to any representatives of the Recipient, except in accordance with the terms of the confidentiality agreement, or be divulged to any third party without the prior consent in writing of the Company or Macquarie. Any such representative or third party may be required to enter into a confidentiality undertaking in terms acceptable to the Company as a condition of the Company and Macquarie giving their consent. This IM has been prepared for information purposes only. Its sole purpose is to assist the Recipient in its consideration of investing an equity stake in the Company. This IM is being released during the initial stage of the equity investment process for the Company.

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Important notice and disclaimer

Carlyle

01 Insert divider title 3

A Insert divider title 7

Contents

STRICTLY CONFIDENTIAL

Contents

STRICTLY CONFIDENTIAL

01 Executive Summary 3

02 Attractive industry fundamentals 10

03 Focused broadband operations through superior fiber based technology 18

04 Comprehensive product offerings to Home and Enterprises 23

05 Proven execution capabilities with a well established digital infrastructure 31

06 Strong parentage and an experienced management team 36

07 Robust performance – On a strong growth trajectory 40

08 Growth strategy 43

A Global experience in FTTH rollout 50

B Key architecture 53

Carlyle


Executive Summary

01 Carlyle


1) Spectranet is the brand name under which Citycom Networks provides services

Spectranet Vision

Innovative and disruptive technology company, dedicatedly working to deliver joy, advantage and success for people through and by, the continuous pursuit of excellence in internet services

Who is Spectranet1?

Spectranet Vision?

Exist to revolutionize broadband services in India by providing simple-to-understand yet state-of-the-art

services that will enable people of India to do so much more in their daily lives, thereby bringing them unprecedented advantage and joy, ultimately resulting in their success

Our Vision is to be the best internet services provider through the continuous pursuit of excellence in technical

operations and customer satisfaction resulting in long term and sustainable value for all stakeholders

Aim to revolutionize broadband in India by providing a superior internet experience to 1 million customers by

2020 with speeds of 100Mbps+ and at affordable prices

Carlyle


Company Overview Dedicated fiber to the home and fiber to the business operator offering high speed data and voice solutions for 15+ years through an established infrastructure of 4450+ kms of fiber

1) ISP – Internet Service Providers 2) VoIP – Voice over Internet Protocol 3) DOT – Department of Telecommunications 4) # enterprise links = # business internet access subs + # point to point connectivity subs (including carriers) + # Media connectivity subs (including video transport) + # Wholesale IP transit subs; # home links does not include cable broadband subs. “Cable broadband subs” refers to subs served through Local Cable Operators (LCO)

Proven proof of concept with consistent profitability achieved

with a small scale

USD m FY14A FY15E FY16E FY17E FY18E FY19E FY20E

Non-Voice 19 22 39 94 185 287 372

Voice 5 6 7 9 12 12

Revenue 19 27 45 101 194 299 384

Growth 5.0% 44% 65% 123% 93% 54% 28%

Non-Voice 3 4 8 28 66 117 165

Voice 0 0 0 0 0 1 1

EBITDA 3 4 8 28 66 118 166

EBITDA Margin 15.3% 13.4% 16.9% 27.5% 34.0% 39.4% 43.1%

End to end

communication

offering

● Fiber to the home (FTTH) broadband internet services

● Business internet and connectivity services to enterprises, carriers, and ISPs1

● VoIP2 services to enterprises

● Other offerings including datacenter services, media connectivity offerings to media houses, wholesale IP transit to ISPs2

● Wireless in-building coverage solutions (“IBS”) to mobile service

providers

Licenses

● Internet Service Provider category “A” ● National Long Distance (“NLD”) ● International Long Distance (“ILD”) ● Infrastructure Provider Category 1 registration with the DoT3

Locations ● 150 Points Of Presence (“POP”) across 5 top cities of India - Delhi-

NCR, Mumbai, Pune, Bangalore and Chennai

Infrastructure

● Data infrastructure - Over 4450kms of fiber (owned 2230kms) ● International data and voice gateway in Mumbai ● IBS infrastructure - more than 530 building and 120mn+ sft

Key business statistics (March 15E )

Customer

Universe

Current links4

Speed Range

Highest Volume

~11,400 businesses

~138,000 homes

3,400+

businesses

23,500+ homes

5 - 200 Mbps per business

20 - 100 Mbps per home

Unlimited For business

600 GB For home

Carlyle


Comprehensive data connectivity and voice solutions catering to home and business segments

1) # enterprise links = # business internet access subs + # point to point connectivity subs (including carriers) + # Media connectivity subs (including video transport) + # Wholesale IP transit subs; # home links does not include cable broadband subs

2) ARPU is based on recurring revenue divided by total links – excludes VoIP and Data center revenues; Home ARPU excluding cable revenue

Full service solution provider D

escri

pti

on

High speed business internet Office to office connectivity Video transport over fiber Voice over IP

Rev

en

ue

13

148

0 20 40 60 80

100 120 140 160

FY15 FY20E

US

$ m

n

5

216

0

50

100

150

200

250

FY15 FY20E

US

$ m

n

Data center services Service provider segment -

Internet and Point-to-Point links to carriers and other ISPs

International long distance National long distance

5

12

0

2

4

6

8

10

12

14

FY15 FY20E

US

$ m

n

Business Segment Voice

CAGR 64% CAGR 113% CAGR 19%

3.5 40.9 23.7 976.5

296 307 13 19

Home broadband services primarily over FTTH and some over cable

Home Segment

Indoor distributed antenna system (“DAS”)

to buildings, residential complexes and enterprises

Outdoor DAS offering to large campuses

IBS offerings

5

9

0.0

2.0

4.0

6.0

8.0

10.0

FY15 FY20E

US

$ m

n

CAGR 11%

532 793

1.7 1.8 Tenancy

per sq. ft.

# Buildings

ARPU1

US$/ month

# links

(‘000s)1

Carlyle


Key investment considerations

Increasing

demand for fiber

driven higher

speeds and

reliable

broadband

connections

Focused wire-line

broadband

strategy

● India internet penetration expected to cross 40% (19% currently) driven by increasing urbanization, younger population and government impetus

● Strong CAGR of 48% expected in broadband subs over 2013-18 due to large burst in data usage (5.5x between 2013-18); 4.4x increase

in wire line subs (from 15 mn subs in March 2014 to 65 mn subs by 2020)

● Greater need for ultra-high speed broadband which can be serviced only using fiber technology

— Video traffic to increase 9.0x over 2013-18, contributing to 73% of total internet traffic (49% currently); strong growth in HD and ultra-HD

— Growing number of internet enabled devices per household (“HH”) - smartphones (CAGR 35%), tablets (CAGR 48%), connected TV (CAGR 30%)

— Increasing demand from enterprise solutions and cloud computing (business internet traffic to increase 3.4x over 2013-18)

● Proven proof of concept of FTTH – fastest growing broadband technology globally increasing from 12% market share in 2010 to 22% market share in 2013

● Amongst the few pure-play, dedicated wireline broadband internet and connectivity service providers in India

● Focused strategy with c. 61% revenues derived from broadband and related services – Revenue CAGR of 23% over FY13-15

● Broadband is non-core to competitors resulting in lack of focus and fight for capital

Superior

technology

platform

● Predominantly fiber to the home and enterprise offering, which is the future proof medium for delivering speeds of 1 Gbps and beyond

● Currently Company offers high speeds of 5 to 200Mbps to its full universe; plans to offer minimum speed of 100 Mbps to all customers in next couple years

● Most competition on legacy DSL and cable platform, which can efficiently offer up to 4 Mbps; significantly expensive and time consuming to replace

Carlyle


Key investment considerations

1) Capex based on own greenfield roll out of fiber to home and enterprises in new locations; margins based on stable state operations by FY18

Proven execution

capabilities with a

well established

infrastructure

Located in the key

cities of India

Strong Parentage,

Experienced

Management Team

with a Proven Track

Record

● End to end in-house execution capabilities including market planning, network planning, acquiring permissions, network rollout, sales, marketing, customer support, and back-end operations

● Established infrastructure of 4,450 kms of fiber across India - 2,230 kms rolled out by Company with the remaining leased from partners

● International Long Distance Gateway (voice and data) in Mumbai

● Presence in the top 5 of the 8 internet using cities in India - Mumbai, Delhi-NCR, Bangalore, Chennai and Pune

● Combined HHs in these cities expected to be more than 17mn households with a population of more than 43 mn

● Estimated to have almost 25% of total internet base in India

● Part of the Shyam Group, which has been involved in various telecom and technology operations for over 4 decades.

● Experienced management and leadership teams with over 15 years of experience in the broadband space

● Active members of key regulatory panels involved in providing framework for broadband roll-out in India

Robust performance

- Proven proof of

concept

● Established proof of concept with consistently achieving high profitability even at a smaller scale - Gross margins of 40.3% and EBITDA

margins of 13.4% in FY15

● Robust subs growth – Enterprise CAGR of 24.1% and residential CAGR of 143.5% over FY13-15

Superior value

proposition

● Superior product offering at high speeds, no usage restrictions and several value added services at a cost effective ARPU

● Effective payback period of less than 2 years for home and enterprise1

Carlyle


Company looking to raise USD 50 mn for growth capital over next 5 years

(1) Excludes partner roll-out (2) # enterprise links = # business internet access subs + # point to point connectivity subs (including carriers) + # Media connectivity subs (including video transport) + # Wholesale IP transit subs; # home links does not include cable broadband subs

Universe targeted

Total planned “own” OFC roll-out1

Opportunity overview

Rollout c. 8000 kms additional fiber in existing core 5 cities

Augment existing network with last mile access

connectivity to enhance penetration

Target to reach universe of 3.6 mn homes and c. 140k

enterprises in next 5 years – target penetration of 24-27%

Strengthen network infrastructure and further deploy

backhaul equipment to deliver superior service

Ability to provide minimum 100 Mbps speeds to all users at

affordable ARPUs

2,230

9,780 750 1,600 2,200

1,800 1,200

0

3,000

6,000

9,000

12,000

FY15 FY16 FY17 FY18 FY19 FY20 Total

No

. o

f km

s

# Links2 (broadband customers)

11

137

20

34

30

25 16

0

50

100

150


# p

ote

nti

al

lin

ks

(‘000)

Enterprises

138

3,650

294

806

1,001

830 581

0

1,000

2,000

3,000

4,000


Home

3

41

5 9

10

8 6

0

10

20

30

40

50


# lin

ks (

‘000)

Enterprises

24

976

50 160

260

268

215

0

200

400

600

800

1,000

1,200


Home

Carlyle


Attractive industry fundamentals

02 Carlyle


26% 28% 36% 25% 30%

26% 31%

39%

31% 30%

20% 24%

16%

22% 20% 14%

10% 6%

15% 12% 13% 7% 3% 7% 8%

0%

20%

40%

60%

80%

100%

Worldwide China India Russia Brazil

15-24 25-34 35-44 45-54 55+

Increasing urbanization, young population, increasing affordability coupled with regulatory impetus to lead to sharper growth in internet penetration

Source: internetlivestats.com - India numbers updated per TRAI estimates – India numbers updated

High correlation between India’s increasing

urbanization and internet penetration

Amongst the youngest user base - 65%

users below 34 Priority for government

‘National Fiber Optic Network’ (NOFN) - Network to cover 250k Gram Panchayats where there are nearly 600k inhabited villages

National telecom policy 2012 aims to provide affordable and reliable broadband-on-demand to 600 million by the year 2020 at minimum 2 Mbps download speed and making available higher speeds of at least 100 Mbps on demand

TRAI released consultation paper for identifying key steps to be taken by stakeholders

India Internet - Ready to take off

…however, penetration expected to cross 40% by 2020

Low internet penetration despite being the 3rd largest user base

(Jul 2014)...

642

280 252

109 108 84 72 67 57 55

Chi

na

US

A

Indi

a

Japa

n

Bra

zil

Rus

sia

Ger

man

y

Nig

eria

UK

Fran

ce

Inte

rnet

users

(m

)

0%

10%

20%

30%

40%

50%

0

100

200

300

400

500

600

700

FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

To

tal

su

bs (

m)

Mobile Internet Subs(m) Internet Penetration

46% 87% 19% 86% 53% 59% 87% 38% 90% 86% Penetration

10

5

15

0 25.5 26.0 26.5 27.0 27.5 28.0 28.5 29.0 29.5 30.0 30.5 31.0 31.5 32.0

Internet Penetration (%)

Share of population that is urban (%)

R2=0.80

Source: ITU presentation on empowering Rural India by

DEMOCRATISING INFORMATION through Broadband dated April 2012

Source: Analyst research

Source: Comscore Source:Worldbank

Carlyle


28.5

%

28.8

%

38.8

%

35.7

%

34.6

%

16.6

%

10.1

%

13.6

%

1.2%

92.8

%

120.

5%

57.1

% 87

.2%

44.7

%

60.1

%

51.5

%

21.4

%

3.6%

0%

20%

40%

60%

80%

100%

120%

140%

USA Japan France UK Germany Russia Brazil China India

Pen

etr

ati

on

Fixed Broadband Mobile Broadband

Broadband yet to play out with eventual shift to better technology and growing data consumption

1) Includes 0.04 million subs of Fixed wireless

Amongst the lowest broadband penetration levels

…having the lowest speed when compared to key peers

State of broadband in India as on March 2014

India broadband still in infancy

23.6

14.6 13.3

8.9 8.4 6.0 5.6 5.2

3.5 3.2 2.4 2.1 2.0 1.7

Sou

th

Kor

ea

Japa

n

Hon

g K

ong

Taiw

an

Sin

gapo

re

Aus

tralia

New

Ze

alan

d

Thai

land

Mal

aysi

a

Chi

na

Indo

nesi

a

Phi

lippi

nes

Vie

tnam

Indi

a

mb

ps

Population – 1.26 billion

Internet Users – 252 million

Broadband –

61 mn Only 4.8%

broadband

penetration

Wired

Cable

Wireless

15 mn

(24%)

1.9 mn

(13%)

46 mn

(76%)

Only 19%

internet

penetration

Narrowband –

191 mn

ADSL

13.0 mn

(87%)

FTTH/

Others

0.1 mn

(1%)

Fixed

0.4 mn

(1%)

Mobile

45.6 mn

(99%)

Wired

4 mn

Mobile

wireless1

187 mn

Source: TRAI Consultation paper dated September 2014 Source: Department of Electronics and I.T. presentation on Broadband Internet Infrastructure and

International Connectivity

Source: Broadband commission report on state of Broadband in 2013, TRAI

Carlyle


As more services go online and increase in virtual content library, increasing need for higher bandwidth; broadband expected to grow by 48% CAGR over 2013-18

Source: Analyst research Cisco VNI projections

1. CAGR based on 350 mn mobile broadband subs and c. 44mn wireline subs expected by 2018

Data burst to drive demand for broadband

Ticketing/

Billing

Advertisement

Ecommerce

Video

streaming

E-commerce to grow

4x by 2018

Online advertisement to grow

3x by 2018

Online travel likely to double to

US$ 19 b by 2018

2nd

largest users 2nd

largest users

Video consumption to grow

9x by 2018

Imp

act

Online

gaming

Video

streaming

Maps/

Navigation

E-health

E-

commerce

Infant stage Rising stars Successful

Ticketing/

Billing

Classified/

Ads

Search

Social

networking

Music

High Medium Low Bandwidth requirement

Adoption

Data requirement CAGR

41% (2013-2018)

555 Pb/month

3100 Pb/month

2013 2018

Peta

byte

/mo

nth

5.5x

Data consumption needs to grow

Broadband subs CAGR 1

48% (2013-2018)

15

65

2013 2020

Fix

ed

bro

ad

ban

d

su

bs (

m)

Increase in broadband subs.

39

350

2013 2018

Mo

bile b

road

ban

d

su

bs (

m)

9x 4.4x

Source: Street projection on key internet based businesses/activities, Deloitte report on Broadband: The lifeline of digital India, November 2014; WARC 2014

Spend 6+ hours on internet daily

India Global

46%

29%

56% cant

survive more than

5 hours without

internet

82% Indians fear

missing out without internet

Highest in the World

Carlyle


Growing video consumption coupled with shift to internet TV with superior technology will require ultra-high broadband speeds

Source: FTTH council of Asia presentation, HIS – high speed internet

Application bandwidth requirements demanding ultra-high

speeds

Key drivers for FTTH - Video demand

FTTH / 100M

FTTH: Future-proof Infrastructure for connected Home Services

1000 100 50 20 10 10 20 50 100 1000

Next Gen TV – Super High Vision

1 Channel 3D TV + 1xHD + 2xHSI

2xHDTV + 2xHSI + up/download

Family HD video Call

2 Channel HD TV + i-Player

Connected

Home

Upload DVD in 10 mins

1GB Backup in 10 min

HD PC Video Conference

ADSL / 2 + / M

Internet

1xHD You Tube

VDSL2

CATV / HFC-DOCSIS

Downstream

Capacity (Mbps)

Upstream Capacity

(Mbps)

Ultra-high speed internet essential for rising high resolution

video consumption

49%

73%

2013 2018

% o

f to

tal

traff

ic

Share of video traffic in India CAGR (2013-18)

55%

250 Pb/month

2200 Pb/month

2013 2018

Peta

byte

/mo

nth

Video data consumption in India

9x

With increasing share of ultra-high resolution videos

Ultra HD % of Internet video

HD % of total Internet video

4.5% 18.5%

CAGR (2013-18)

105%

378% 0% 2.5%

2013 2018

Source: Cisco VNI forecasts,

Carlyle


1.0

1.5

2013 2018

## n

etw

ork

ed

d

evic

es (

bn

)

Better affordability and rapid improvement in technology leading to higher number of internet enabled devices and greater need of high speed connections

Source: Cisco VNI forecasts

Expected growth in internet enabled devices…

Key drivers for FTTH - Robust growth in internet enabled devices

Device

Total units (million)

% of total

networked

devices (2018)

CAGR

(2013-18)

Smart phone 35% 35%

Tablet 4% 48%

PC/Laptops 3% 1%

Connected TV 12% 30%

4K TV N.A. 355%

Feature Phone 35% -7%

117

515

9

62

44 46

48

177

0

6

746 515

2013 2018

Significant increase in networked devices

Source: Cisco VNI forecasts

0.8

1.1

2013 2018

# D

evic

es p

er

cap

ita

Increased affordability leading to increased smart phone and

tablet sales which is likely to continue…

0.3 2.7 4.1 2.6 11.0

16.2

44.0

80.0

0

25

50

75

100

2011 2012 2013 2014E

To

tal

sh

ipp

ed

un

its (

m)

Tablet sales Smart Phone sales

Smart phone CAGR

(2011-14) 94%

Tablet CAGR (2011-14) 112%

135

102

50

75

100

125

150

2014 2018E Avera

ge s

mart

ph

on

e p

rice (

US

$)

Avg. price CAGR

(2014-18) -7%

Source: News articles, street research, IDC Carlyle


US $ 4b (2013-2017)

Cloud services and growing needs for high video usage to drive adoption of ultra-high speed internet

Source: Cisco VNI projections, FTTH council presentation

Key drivers for fiber internet - Enterprise demand on the rise

Business customers needs ultra-high speed internet

Overall business demand metrics

Overall cloud services spend in

India

● Driving consumerization of IT services

● Accelerate reinvestment of IP cost savings by clients

● Leveraging cloud to drive market facing differentiation

121

406

2013 2018

To

tal

bu

sin

ess d

ata

co

nsu

mp

tio

n

(Pb

/mo

nth

)

Increase in business Internet traffic

30%

60%

2013 2018

% s

hare

of

tota

l b

usin

ess t

raff

ic

3.4x

36

242

2013 2018

Vid

eo

data

co

nsu

mp

tio

n

(Pb

/mo

nth

)

6.7x

Share of video traffic in business Increase in business video traffic

Drivers of investment in

cloud services

Bandwidth 25- 50 Mbps 100 – 120 Mbps 1Gbps +

Cloud computing

/ storage

Software as a service (Saas) ● Video conference services ● IPTV services ● Maintenance: on –demand backups & restore

Platform as a Service (PaaS) ● Software testing and quality assurance ● Network testing and optimization

Infrastructure as a Service (Iaas) ● Virtual machine (min. 1Gbps) ● Load balancing ● High availability ● Disaster recovery

Small Medium

Enterprises

Enterprises

Service Providers

Source: FTTH council presentation, Paul Budde report on Broadband market in India Carlyle


79 93

160

2012 2013 2017

FT

TH

su

bs (

m)

+14 m

FTTH has been the fastest growing wired broadband technology with >100 countries adopting it; consistently gaining share with key regions focusing on aggressive roll-out

FTTH development in different regions Increased penetration and healthy growth in FTTH subs vs. other

fixed broadband technologies

Proven proof of concept – FTTH globally fastest growing technology

316 364 379

158 120 127

65 124

147 5

20 13

0

100

200

300

400

500

600

700

2010 2012 2013

DSL Cable FTTH Other

Asia Pacific

● Share of FTTH improved from 29% in 2012 to 32 % in 2013

● 17% CAGR in 2011-17 with 1563 new users added/ hour

● USD 60 bn worth of projects in Asia

DSL, 58% Cable, 29%

FTTH, 12%

Other, 1%

DSL, 58% Cable, 19%

FTTH, 20%

Other, 3%

DSL, 57% Cable, 19%

FTTH, 22%

Other, 2%

Source: Paul Budde report on Broadband Market Global

CAGR

33.6%

31.0%

-7.0%

6.2%

+67 m

Overall

● Developed economies FttP demand over the

next 5 years to grow to ~30%-50% of the

population

2.0 16.4

41.4

2007 2012 2017

FT

TH

su

bs (

m)

CAGR 45% Europe

● Still immense room for growth, Russia alone contributing 8.9m subs

● Biggest rollouts in Spain (+2.4m), France (+0.7m), Sweden and Portugal (0.55m)

+25m

Mrk

t sh

are

0.8 1.3 2.3

2012 2013 2017

FT

TH

su

bs (

m)

Yoy 66.5% Middle East

and North

Africa

+1 m

Source: FTTH council presentations for APAC, Europe and MENA

Carlyle


Focused broadband operations through superior fiber based technology

03 Carlyle


Dedicated broadband services over faster and more reliable FTTx network to homes and businesses

Spectranet in context

Key players Mobile operators PSU operators, Airtel, Tata Cable operators (TV + Broadband) Home - Pure broadband players

Enterprise – Telcos, Pure broadband

Scale (Mar 14) 46 mn 13 mn 2 mn <0.1 mn

Key

considerations

Relatively easier and cheaper to deploy

Paucity of spectrum limiting high speeds

Diverse businesses – lack of focus and fight for capital

Spectrum rebidding

Large captive wireline sub base

Legacy copper infra but poor quality - time consuming & expensive to upgrade

Speeds drop significantly with distance

PSU dominated - high bureaucracy; poor customer service

Continuously declining market share

Large captive TV sub base (c. 100 mn)

Existing infrastructure but poor quality - time consuming & expensive to upgrade

Players primarily focus on TV - “once in a lifetime” digitization

High leverage levels

− Scale impacted by relatively higher

cost of roll out; however costs have

been declining in last few years

− Speed not impacted by any distance

− Ability to bundle additional services

such as TV content, media applications

− Relatively inelastic pricing - catering to

top end clients

Incre

as

ing

AR

PU

Speed + Reliability

Mobile Wireless

(GSM, CDMA - 2.5G / 3G / 4G)

DSL (ADSL, VDSL)

Cable (DOCSIS, Ethernet)

Fiber (FTTH, FTTB2)

1. Current speeds being offered . 2. FTTB - Fiber to the Business Source: TRAI Broadband paper; Classifications of players by technology based on majority offering

10-100 Mbps1 10-50 Mbps1 <5 Mbps1 1-5 Mbps1

Primarily Business

Carlyle


Broadband 0%

Other Rev 100%

FY14 Revenue Split DSL 23%

Other Rev 77%

FY14 Revenue Split

Broadband 18%

Other Rev 82%

FY14 Revenue split

Broadband 61%

Other Rev 39%

FY15 Revenue Split

Wireline broadband is not core focus area and is a relatively smaller contributor for competition

1) Airtel’s DSL revenue calculated on the basis of non-voice share of Telemedia segment revenue 2) As on Dec-2014 3) # enterprise links = # business internet access subs + # point to point connectivity subs (including carriers) + # Media connectivity subs (including video transport) + # Wholesale IP transit subs; # home links does not include cable broadband subs Source: Company filings

DSL 3%

Other Rev 97%

9MFY15 Revenue Split

Focussed wireline strategy Broadband is the core business for the Company

DSL (ADSL, VDSL) Cable (DOCSIS, Ethernet) Fiber (FTTH, FTTB)

Total subs:

1.5 mn2

Dec’12-Dec’14

Sub CAGR:

3.8%

Total subs:

1.2 mn

FY12-14 Sub

CAGR: 6.1%

Total subs:

10.0 mn

FY12-14 Sub

CAGR: 6.0%

Broadband 18%

Other Rev 82%

9MFY15 Revenue Split

Total subs:

0.4 mn2

Mar’13-Dec’14

Sub CAGR:

1.9%

Total subs:

n/m

Started ops in

FY14

Total subs3:

26k

Mar’13-Mar-15

Sub CAGR:

108%

1

Carlyle


Significantly superior wireline technology... Fiber to the home and business

4 High 2 Medium 1 Low

Docsis 3.0 ADSL GPON (FTTH)

Technology

2 1 4 Medium

(scalability requires extending fiber network and equipment upgrade)

High

(scalability requires extending fiber network, more copper network,

increasing copper pairs per household, and equipment upgrade)

Low

(scalability requires equipment upgrade only)

Similar

2 4 1

Symmetric bandwidth

High Speed

Scalability cost

Last-mile cable

deployment cost

Last-mile cable O&M

cost

Carlyle


1) Illustrative for services to Home segment Source: Company information

...enabling Spectranet to offer 20+Mbps speed to its universe 1

AC

CE

SS

IBIL

ITY

H

igh

High Low

Lo

w

LCO

% o

f n

etw

ork

to

deliv

er

20M

bp

s &

Mo

re

AFFORDABILITY

Network capability a key differentiator of Specranet’s offering compared to industry peers

Carlyle


Superior, affordable product offerings to home and enterprises

04 Carlyle


High Speed Broadband High speed with low usage restrictions and several value added services… Superior product offering for home at the most affordable rates compared to other players

Spectranet Broadband Powered by FOX (Fiber Optic Xperience) delivered on fiber optic cable

Intelligent, future proof and 100 times faster than DSL

Move from 2 Mbps to 100 Mbps

Fiber optic

platform

100x Faster

24 GB to Unlimited Super Volume

Differentiated products at accessible price points - ARPU of c. USD 13 for Home and USD

296 for Enterprise

Affordable

price point

Intelligent CPE’s – parent control Anti-virus and anti-spyware

features Free tech assist

Value added

Features

Carlyle


Players < 1,000 1,000 – 1,500 1,500 – 2,000 2,000 – 3,000 > 3,000

Speed (Mbps) 20 50 100

FUP 24 GB / 32 GB Unlimited Unlimited

Speed (Mbps) 2 or less 2 – 8 8 – 16 4 – 24 100

FUP < 20GB < 30GB < 35GB < 175GB < 100GB

Speed (Mbps) 1 – 10 5 – 50 10 – 50 20 – 100 100

FUP ≤ 20GB ≤ 50GB ≤ 50GB <100GB < 200GB

Speed (Mbps) 512 Kbps – 5 Mbps 50 50 - -

FUP ≤ 25GB < 25GB < 25GB - -

Speed (Mbps) 512 Kbps – 10 Mbps 10 – 50 - - -

FUP < 12GB Unlimited - - -

Speed (Mbps) 2 – 4 20 – 40 60 60 80

FUP < 30GB < 75GB < 100GB < 200GB < 350GB

Speed (Mbps) 5 – 10 5 – 20 20 – 50 50 – 100 100

FUP < 40GB < 100GB < 100GB < 100GB < 100GB

Local Cable operators Speed (Mbps) 2 – 5 5 – 10 - - -

FUP Limited Limited - - -

“Pay less for more”

For Home only; business pricing is not standardized Source: Street search, Company websites

High Speed Broadband …at highly affordable ARPUs

Home Segment Price Range (INR/month)

Carlyle


(1) Excluding INR 1mn of Bandwidth Revenue which is part of Enterprise access revenue

Internet and point-to-point services to carriers and others ISP: over own network

5Gbps of internet bandwidth sold

Around 200 point-to-point links to carriers

Key clients include

Media

Pioneer in video transport over fiber

Uncompressed live video feed from event location to studio or uplink stations

Superior quality with higher reliability

Primary service provided to

Data Centre

Strategic partnership with Netmagic

Integral part of bandwidth sales strategy

Operates services for medium enterprise business and shared hosting customer

Presently hosting Tier – III data centers in Noida Mumbai & Chennai

Key offerings include

— Co-location (rack space, power & connectivity)

— Managed services (backup, OS, database & connectivity management)

Rack Internet and Rack Connect product to be unique competitive propositions

Other Data Connectivity and Infrastructure Offerings

Service Provider

IP Port

Carlyle


1) VoIP (Voice over Internet Protocol) is meant for digitising the human voice and sending the same on Internet Source: Company information

Voice Offerings V

oic

e B

usin

ess

Inte

rna

tio

na

l L

on

g D

ista

nc

e (

ILD

)

ILD license since 2008

Undertakes sales and marketing effort to interconnect with international Telco’s and Carriers and send India inbound calls to its

partner POP located in New York , USA and from there through a dedicated international private leased circuit (“IPLC”) link till its ILD

gateway in Mumbai, India

Process these calls and handover to NLD partners like Tata Comm., Tata Teleservices, Uninor

Progressively building own NLD network

Business Overview

Offering includes:

VoIP minutes: Outgoing calls from India (using Internet) to any country

Managed VoIP: Bundled internet bandwidth and VoIP to Enterprise and BPO clients E

nte

rpri

se

VO

IP1

Network Architecture

SBC at NY

Carrier A

IPLC Link

USA INDIA

Citycom ILD POP Mumbai

Carrier C

TTSL UNINOR AIRCEL SIFY

Traffic handed over to

NLDO’s on TDM/IP

TATA

Airtel Vodafone Idea

NLDO’s will further

handover traffic to

UASL

Airtel Vodafone Idea

Carrier B

Client B Client C Client D

IDT

NOVATEL

Tata

Citycom

Enterprise POP at

Netmagic Noida

Traffic handed over to

Carrier on Internet Cloud Traffic further handed

over to Carrier-Partner

for onward termination

Traffic originated by end client

and handed over to Citycom

on internet cloud (Bandwidth

can be third Party or Citycom)

Client A

Carlyle


India’s first & largest digital utility infrastructure company

(1)Billable area in sq. ft.,

Key Operating Metrics

Particulars FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20

No. of IBS Sites 503 522 532 571 629 685 741 793

Sold site area (mn sft)(1) 164.4 192.4 205.0 218.3 245.4 270.4 295.7 319.7

Tenancy 1.45x 1.63x 1.70x 1.68x 1.72x 1.74x 1.76x 1.78x

Realisation/sq. ft (cent) 2.7 2.8 2.6 2.6 2.7 2.7 2.7 2.8

Revenue (US$ m) 4.8 5.0 5.1 5.4 6.1 6.9 7.7 8.5

Service Offering

Introduction

In-building solutions offering

Indoor DAS (In-building Solutions)

Outdoor DAS in large

residential, educational

and commercial facilities

Noida

Bangalore Mumbai

Service Current Status Key projects

500+ buildings

Over 120 mn sq. ft.

Across 42 cities

India’s 1st ODAS rolled out in

educational campus

1.6 sq km in Delhi Deploys low powered antennae on

utility poles/buildings

Ubiquitous coverage in open areas

Builds, owns, licenses indoor wireless network infrastructure - both passive and

active networks (RF-over-Fiber DAS )

Uniform coverage across the building

Market leader in neutral host in-building communication infrastructure services

Focused on providing specialized solutions for coverage, capacity and quality problems for operators

BOOL (Build,Own,Operate,Lease) Model - Acquire right of way, design, deploy, upgrade, and manage the IBS network at own cost and lease it to mobile operators - long term Master Services Agreement with nearly all mobile operators

Installations improve mobile coverage & capacity and are compatible with all 2G, 3G & 4G technologies

Potential to offer Wi-Fi access on IBS network ; neutral infrastructure also allows integration of various services such as FTTH, video surveillance, building management systems, etc

Carlyle


Key value creation for all stakeholders and end customers

Source: Company information

Value proposition

— “Mobile Friendly” complex - enhances experience for occupants

— Dealing with single party as against multiple MSPs convenient for real estate operators

— Building aesthetics maintained since only single wiring with guarantee on future up-gradation as required

— Space Optimization

Services Provided by DAS Operator

In-building solutions offering

Real Estate Owner

Provides the right of way and space to the DAS operator

Charges fees from the DAS Operator

DAS Operator

Site design, deployment and commissioning

Purchase and install all equipment and cabling

Network operations and monitoring

Technical support and remove all performance risk

Manage the relationships with real estate owner, municipalities, contractors and utilities

Mobile Service Provider

Uses DAS equipment to provide coverage

“Lock-in” through long term contracts with the

DAS Operator

Rentals Electricity Charges

Infrastructure Usage Charges

Rentals

Electricity Charges

Value proposition

— Shared infrastructure resulting in opex and capex savings

— Deal with a single party for several buildings

— Approvals, dealing with municipalities, real estate operators handled by DAS Operator

— Focus on core business activity

— Neutral host, guarantees entry and prevents lock-out

— Faster network rollout

Synergy with core business

Planning and Execution

— “RoW acquired for laying of Infrastructure inside the building and fiber access from outside shared between IBS and FTTH

— Skilled Network Planning and Project Management teams

Infrastructure sharing

— Outside Service Plant (“OSP”) Optical Fiber Cable

(“OFC”) infrastructure

shared with Outdoor DAS infrastructure deployment

— IBS/DAS implemented in more than 500 buildings (totalling 120 million sq ft)

Leveraging relationships

— Multilateral buy and sell relationships with telecom service providers

— Existing strong relationships with a large number of real estate developers

Carlyle


Proven execution capabilities with a well established digital infrastructure

05 Carlyle


Proven execution capabilities with well established infrastructure both domestically and internationally

* IPLC - International private leased circuit *ITSP – Internet Telephony Service Provider *MPLS – Multiprotocol Label Switching *NNI – Network to Network Interface

Well established digital infrastructure… Large scale Fiber network + Voice infrastructure

International Data and Voice Gateway in Mumbai

— Current capacity of over 300million minutes per month

— Provides Spectranet with several benefits such as:

— Lower purchase price of transit bandwidth or IPLC*

— International brand coverage

— Enabling multilateral partnerships with international carriers, content distribution networks, and content companies

— Enhanced technical capabilities

— Superior customer experience

Own and manage VOIP soft switch at Delhi and USA

— Offering ITSP* services with multiple international carriers

— Offering managed VOIP services and Direct Inward Dialing

Voice inter connects with global telecom operators

1

2

3

INTERNATIONAL DOMESTIC

Over 4, 450 kms of fiber optic network

— 2,230 Kms on own fiber network connecting 4,500 buildings

Operating 150 POPs

— Central network operation centre in Delhi and operating 150 POPs for connecting building’s and customers

Individual NNIs* with domestic carriers and ISPs

1

2

4

Tier 3 Datacenter (in alliance)

Tier-III Datacenter (in alliance)

— Delhi ~4000 sq.ft. raised floor

— Mumbai ~2000 sq.ft. raised floor

— Chennai ~2000 sq.ft. raised floor

5

Multiple Gig NLD Capacity with own MPLS* POPs

— Six metros i.e. Delhi, Mumbai, Chennai, Bangalore, Pune and Kolkata

3

Carlyle


Established presence in the “high” internet and broadband usage cities

…in top cities of India

Delhi / NCR

Mumbai

Pune

Chennai Bangalore

Network spread OFC (km)

Bangalore (own) 758

Chennai (own) 250

Delhi / NCR (own) 1,065

Mumbai (own) 157 IRU / Swap / Lease

(includes Pune) 2,228

Total 4,458

Company focused on India's top internet and broadband

markets 10.5

6.5 6.4 4.9 4.8 4.1 3.7 3.6 3.4 2.7 2.3 2.1 1.6 1.2 1.1 0.7 0.6 0.5 0.4

0 2 4 6 8

10 12

Mah

aras

htra

Tam

il N

adu

Del

hi

Kar

nata

ka

And

hra

Pra

desh

Guj

arat

Utta

r Pra

desh

Ker

ala

Wes

t Ben

gal

Mad

hya

Pra

desh

Raj

asth

an

Bih

ar

Pun

jab

Oris

sa

Har

yana

Nor

th E

ast

Ass

am

J&K

Him

acha

l P

rade

sh

Bro

ad

ban

d S

ub

s i

n m

n

Claimed Internet users

130 Mn

Active Internet users

108 Mn

To

p 8

Me

tro

s

Re

st

of

Ind

ia

9% 10% Mumbai

6% 6% Delhi

3% 4% Kolkata

3% 3% Chennai

3% 2% Hyderabad

3% 3% Bangalore

2% 3% Ahmedabad

2% 2% Pune

21% 22% Small Metros

11% 12% Non Metros

10% 10% Small Towns

25% 23% Towns with <0.2 mn

Over 11K connectable enterprise tenants (+3.4K links on network)

and ~138K residential apartments

Source: Deloitte Survey - Broadband The lifeline of Digital India (Nov 2014)

Carlyle


First point of contact for all customer complaints / requests and information to potential customer on the toll free number, SMS and email

Coordinates with NPO*, SDA*, backend teams and marketing for support

Responsible for monitoring of the network through NMS

Centrally operated from Gurgaon (iYogi premises) and works 24x7Hrs

End to end network execution capabilities

Identification of the potential markets

Mapping of the buildings in the potential markets

Acquiring the database for pre sales and network planning

Acquiring information for Outside Service Plant (“OSP”)

planning

Integrating the data with existing OSP network

Prioritization of the data for Go-to-market

Proposal submission

Negotiation and acquiring right of way

Identification and acquisition of the POD location

Pre launch marketing and sales activations

OSP Network Rollout

Inside Service Plant (“ISP”)

Network Rollout

OSP and ISP maintenance

Home Business – largely direct sales (on and off rolls) supported by the retail channel – go to market activities, lead generation, sales closure and collection

Enterprise Business – largely direct sales (on roll) supported by channel partners – lead generation, sales closure and collection

Service provider and media business – All on roll relationship managers

Voice Business – Small and direct on roll team

21 OSP Project Vendors 9 ISP Project Vendors 13 O&M vendors

Billing

Collections management

Upgrade marketing

Customer management

Document verification

Installation, O&M

32 Patrolling Teams 23 Splicing teams 6 Installation teams 31 Network engineers

20 channel partners

Planning Execution of network Launch of Services / Sales Backend services

Enterprise

36 account managers

10 collection / RM

Market Survey, Business Development, Planning, and Project Management – 53 people

Residential

106 sales 19 territory

managers

Proven execution capabilities having established over 2,230 kms of own fiber network across India

In house teams Partners

Customer Technical

Support (CTS)

Customer Tech Support Contact Centre (partner): 80

Customer Tech Support (CTS) – 5 people Backend services: 22

* NPO – Network Planning and Operations *SDA – Service Delivery and Assurance

Carlyle


Company has established strategic partnerships with industry leaders to provide support to its operations

Source: Company data

Nature of Partnership

— Customer Technical Support

— Datacenter Space in Noida, Mumbai, Chennai and Bangalore

— Fiber to the Home (FTTH) infrastructure partnership (Delhi, Ghaziabad, Noida, Bangalore, Pune, Mumbai and Chennai)

— Network access peering and CDN partners (Delhi, Chennai, Bengaluru, Mumbai)

Established strategic partnerships

Carlyle


Strong parentage and an experienced management team

06 Carlyle


Part of the Shyam Group, which has been involved in various telecom and technology operations for over 4 decades

Renowned group with strong expertise in telecom and technology

Business Current Operations

— JV with Russia’s Sistema Group - over USD 3.6 billion invested by the JV

— Currently providing telecom services to over 10 mn wireless subscribers

— Supplier of RF repeaters, optical distributed antenna systems, IP cellular backhaul solutions and other wireless signal enhancement accessories for more than 100 networks on five continents

— Telecom equipment manufacturer providing solar powered turnkey GSM system specifically made for rural areas

— JV with Essel Group, one of the leading Indian media business houses

— Technology service provider specializing in media broadcasting, production, post production, distribution

Carlyle


Name Designation Experience

Udit Mehrotra

CEO and Managing

Director

— CEO of Spectranet and is the visionary behind Spectranet; also co-founded Ubico Networks in 2007

— Led the acquisition of Spectranet by the Shyam Group in 2008 and has served as its CEO since

— Key awards:

— In 2011 London's Global Telecoms Business Magazine named Udit in the list of 40 Global Telecoms Business Leaders under 40 — Awarded the Young Innovative Telecom Entrepreneur Award at the National Telecom Awards 2009 and is featured as a game changer by

CNBC-TV 18 in its “Young Turks Transformers” program

— Master of Science degree in Telecommunication Management and a B.E. in Electrical Engineering from the Stevens Institute of Technology, New Jersey, and USA

Brajesh Jain

President and Head

People and Culture

— Responsible for People and Culture and Regulatory affairs

— An industry veteran and has over 40 years of industry experience at blue-chip companies such as Bharat Electronics Ltd, CMC Ltd, RPG Enterprises Ltd and Estel Communications

— Has led the Indian Internet industry since the inception of the industry in 1999 - serves on the Board of National Internet Exchange of India (NIXI) and as VP of Internet Service Providers Association of India (ISPAI)

— Graduate of IIT – BHU and was a recipient of University gold medal

Nitin Mehrotra

Chief Operating

Officer

— Responsible for Spectranet’s emerging businesses and operational excellence - involved in providing guidance – Voice and Datacenter, IT, and Supply-Chain

— Earlier worked in Marketing and Strategic Planning at Shyam Telecom

— In 2007, Nitin co-founded Ubico Networks and has developed the business strategy of the company, spearheading the ‘size based’ innovative value proposition

Experienced leadership team

Carlyle


Name Designation Experience

Rajat Arora

Chief Commercial

Officer

— Over 19 years experience in the telecom domain

— Joined Shyam Group in 2007 as the COO for Sistema Shyam (MTS) for Rajasthan Circle

— Worked earlier in leadership positions with Airtel and Hexacom

Kishore Gogar

Chief Financial

Officer

— Over 31 experience years in the fields of finance, legal and regulatory matters, the last 16 years of which has been in Telecom

— Earlier CFO for Airtel Services and various telecom circles in Bharti Airtel and held various positions in RCDF

Rupin Jayal

Chief Marketing

Officer

— 3 decades of industry experience in Brand Advertising and Strategic planning, with experience in a wide variety of sectors

— Paper entitled “Mythable Functionality” was awarded a WPP Atticus Award in 2001 and he was featured on CNBC TV18’s “Young Turks”.

Sanjay Govil

Chief Information

Officer

— Extensive international IT experience spanning Manufacturing, IT/ITES, telecom, local government, retail, consumer goods and utilities sectors.

— Held senior management positions in Cosmo Films, OutworX (an IT Outsourcing company), Baxy Infosol, Kanbay (now a part of CapGemini), IBM and Eicher Group.

— Presented the ‘Indian CTO/CIO of the year’ by the CTO Forum and Network Computing Magazine and NASSCOM’s ’The Best IT User for 2004’

award in the automotive sector.

Experienced leadership team (cont’d)

Carlyle


Robust performance – On a strong growth trajectory

07 Carlyle


Strong growth in subscriber universe and customer base by penetrating deep into existing network

1) Penetration is calculated as a % of total Internet links provided (does not include # point to point connectivity subs (including carriers), # Media connectivity subs (including video transport), # Wholesale IP transit subs), # of residential links doesn’t include cable broadband subs

3,563

4,363 4,458

3,000

3,200

3,400

3,600

3,800

4,000

4,200

4,400

4,600

FY13 FY14 FY15

To

tal

Km

s

Total OFC

Robust operational performance

1,800 2,116 2,789

1,200 1,418

1,731 353

544

657

3,353

4,078

5,177

0

1,000

2,000

3,000

4,000

5,000

6,000

FY13 FY14 FY15

No

. o

f b

uild

ing

s c

on

necte

d

Single Tenant Enterprise Multi Tenant Enterprise Residential Complexes

No. of buildings connected

Total number of links

CAGR FY13-15

Total 108%

Residential 144%

Enterprise 24%

2,259 2,491 3,478 3,996

15,302

23,694

0

5,000

10,000

15,000

20,000

25,000

FY13 FY14 FY15

No

. o

f lin

ks

Enterprise Residential

Penetration1

Enterprise

Home

17.4%

13.6%

22.0%

17.2%

17.6%

9.1% Carlyle


Company has achieved a strong revenue growth supported by healthy gross margin of 40%+ and is EBITDA margin of c. 14% with low capital infusion

Consistently achieving healthy gross margins of 40%+

Positive EBITDA margin even with a small scale

Superior growth supported by very limited fund infusion (debt

+ equity) – efficient allocation of capital

Strong growth in top line, achieving a CAGR of 23% over last 2

years

Robust performance Already profitable; significant scope for operational leverage

56.9% 53.2%

40.3%

0%

10%

20%

30%

40%

50%

60%

FY13 FY14 FY15

Gro

ss M

arg

in

11 11 13

2 3 5

5

5 5

5

18 19

27

0

5

10

15

20

25

30

FY13 FY14 FY15

US

D m

n

Enterprise Home Voice IBS

12.0%

15.3%

13.4%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

18.0%

FY13 FY14 FY15

EB

ITD

A M

arg

in

0.9

0.1

1.3

0.0

0.4

0.8

1.2

1.6

FY13 FY14 FY15

To

tal

deb

t +

eq

uit

y i

nfu

sio

n

(US

D m

n)

Decline in GM due to USD 5 mn of voice revenue which is margin neutral; excluding voice, gross

margins are c. 49%

Decline in EBITDA due to USD 5 mn of voice revenue which is margin neutral; else margins

are constant

Decline due to reclassification of Contact centre costs into Direct expenses Launch of FTTH

Stabilization period with package mix evolving

Discontinuance and reduction in certain services (Wi-fi,

cable)

Carlyle


Growth strategy

08 Carlyle


Source: Company information

Summarized PandL Units FY14 FY15 FY16 FY17 FY18 FY19 FY20 CAGR

(FY15-20)

Enterprise Revenue USD m 11 13 22 48 82 117 148 64%

Home Revenue USD m 3 5 12 40 97 163 216 113%

Voice Revenue USD m 0 5 6 7 9 12 12 19%

IBS Revenue USD m 5 5 5 6 7 8 9 11%

Total Revenue USD m 19 27 45 101 194 299 384 70%

Growth (YoY) % 43.9% 65.4% 122.7% 92.5% 53.9% 28.4%

(-) Connectivity Expense USD m 3 3 5 9 16 23 28 53%

(-) Direct Expenses USD m 6 13 20 39 66 93 111 53%

Gross Profit USD m 10 11 20 53 112 183 245 86%

Gross Margin % 53.2% 40.3% 44.9% 52.3% 57.5% 61.1% 63.9%

(-) Personnel Expenses USD m 5 5 8 16 29 41 49 58%

(-) Indirect Expenses USD m 2 2 5 9 17 24 31 66%

EBITDA USD m 3 4 8 28 66 118 166 114%

EBITDA Margin % 15.3% 13.4% 16.9% 27.5% 34.0% 39.4% 43.1%

Key Business Plan metrics

Fiber enables Company to differentiate the products by as much as two orders of magnitude (100x) as compared to the current market offerings at accessible price points.

Significantly differentiated products and better offerings are designed on the principals of simplicity and delivering abundance at affordable price points of $270 to 300 per month to business customers and $15 to 20 for homes.

Enhance the penetration in current coverage areas by building access network over the existing fiber network

Growth based on existing 5 markets: Homes - growth driver will be brown field

residential MDUs Business segment – driven by corporate

parks and industrial areas Detailed survey to establish the universe is

underway, to help in prioritizing the rollout and acquiring the permissions

The prioritization data will help to add more buildings per KM of OFC network delivering 14 buildings per KM in the beginning and maintaining 7 buildings per KM over next few years.

Existing teams and relationships with real estate developers is helping to rollout services in multi-tenant commercial and green field residential buildings to garner the first mover advantage

Growth Strategy

Carlyle


3,478 8,049 16,930 26,619 34,867 40,933

0

20,000

40,000

60,000

FY15 FY16 FY17 FY18 FY19 FY20

No

. o

f lin

ks

Standardized products, increased affordability along with value added services and multi prong sales to act as key levers for growth

1) STE – Single Tenant Enterprises; MTE – Multi Tenant Enterprises 2) Penetration is calculated as a % of total Internet links provided (does not include # point to point connectivity subs (including carriers), # Media connectivity subs (including video transport), # Wholesale IP transit subs) 3) Revenue is shown as inclusive of DC and VoIP

ARPU growth

Total revenue3 growth

Key considerations

Universe considerations

Market Share in STE1 and MTE1 is assumed to reach 15% in the first 3 months and grow to 27% within the first 2 years

MTE1 buildings assumed to have 5 tenants per building ARPU

Low ARPU growth assumed - CAGR of 1% over FY15-20

Key strategy

Standardized product delivery – easy to understand — First and only company to have a standardized portfolio of products; even

today majority of the internet service providers in India are still selling negotiable, unstructured products with the philosophy of rationing bandwidth

— Company approach to lead to faster deal closure and higher revenue realization

— More efficient use of sales resources

Speed — Plan to migrate majority of customers from their current low bandwidth

speeds to 100Mbps and then to faster 500Mbps and 1Gbps speeds overtime

Multi prong sales and marketing strategy — Digital marketing strategy –more efficient and targeted — Large direct internal sales team supported by channel partners

ARPU enhancement through value added services and added incentive -

Remote tech assist, VOIP minutes, Cloud based back up, additional bandwidth for long term contracts

Growth in total number of links

Enterprise Segment

Penetration2 22% 20% 22% 24%

Universe (‘000s) 11.4 31.9 65.7 95.7

13 22 48

82 117

148

0

50

100

150

200


US

D m

n

296 269 276 283 293 307

0

100

200

300

400


US

D

25%

120.3

26%

136.7

Change in mix, higher proportion of business internet subs

Carlyle


5 12 40

97

163

216

0

50

100

150

200

250


US

D m

n

24 74 234

494 762

976

0 250 500 750

1,000 1,250


To

tal

un

its

(‘000s)

Superior offering with increased affordability

1) Multi Dwelling Units 2) Total links does not include cable broadband subs 3) ARPU excludes cable broadband subs

ARPU growth (excluding cable ARPU)

Total revenue growth

Key considerations

Universe considerations

Market share in MDUs1 assumed at 9% for first 3 month and growing to 30% in 3 years

Current market share is 15% and goes over 50% in certain MDUs despite being the 3rd or later service provider

Residential complexes assumed to have 225 tenants per complex

ARPU

Low ARPU3 growth assumed - CAGR of 8% over FY15-20

Key strategy

Affordable — Deliver exponentially higher value / speeds at accessible price points – all

plans starting at 100 Mbps — First to introduce contract plans where price determined on duration of

contract term

Multi prong sales and marketing strategy — Digital marketing strategy — Localized print / outdoor with digital campaigns supporting BTL activities — Largely on-roll and off-roll direct sales people supported by development of

localized retail network such as local IT or electronic goods retailers

Value added services – Tech assist, which provide first of a kind unified customer support experience to support. Further alliances with content providers

Growth in total number of links2

Home Segment

Penetration 17% 17% 19% 22%

Universe (‘000s) 138 432 1,238 2,239

13 14 15

17 18 19

0

5

10

15

20


US

D

25%

3,069

27%

3,650

Carlyle


In stable state (FY18), payback period of less than 2 years for residential and for commercial roll-out

(1) Margins assuming FY18 margins (stable state)

3,629 3,273

61 196

613

A B C

US

$ / b

uild

ing

Network cost Installation cost CPE One time charge

Total connectivity costs and one time charges

Relatively low payback period

Margin per building / month1 (US$)

Payback months

Sm

all T

en

an

t

En

terp

rise

Mu

lti T

en

an

t

En

terp

rise

Resid

en

tial P

er

Co

mp

lex

22 months

Balance per building to be recovered

318

152

167

A B C

Revenue per building Includes Network opex cost Marketing, sales and other

IT/ Admin costs

48% margin per building per month

4,055 3,496

83 186

828

A B C

US

$ / B

uild

ing


10,704 11,271

2,409

3,669 5,512

A B C

US

$ / B

uild

ing


430

164

265

A B C

1,213

463

750

A B C



Revenue per building (5 tenants; 26% penetration)

Includes Network opex cost Marketing, sales, RoW and

other IT/ Admin costs


Revenue per building (225 tenants; 30%

penetration)

Includes Network opex cost Marketing, sales, RoW and

other IT/ Admin costs


BREAKEVEN

21 months

BREAKEVEN

24 months

BREAKEVEN

3,887

4,324

One time upfront payment by new customer

One time upfront payment by new customer

One time upfront payment by new customer 16,783

1 Te

nant

, 27%

pen

etra

tion

5 Te

nant

, 27%

pen

etra

tion

225

Tena

nt, 3

0% p

enet

ratio

n

Carlyle


EBITDA margin bridge

Strong levers in place for EBITDA margin expansion

Invested in building network intelligence adopting latest technologies such as Deep Packet Inspection, intelligent routing, peering and caching.

More data being hosted in India and additional peerings with data centres, the IP transit requirement as % of total bandwidth reduces. Utilization is expected to reduce to 25% from the current approx. 55% as against the sold bandwidth.

Extensive OSP rollout and building connectivity will reduce leasing of fiber or last mile capacities from other infrastructure and service providers, thereby reducing the connectivity expenses

Primarily due to change in business mix

- Voice: Voice is an EBITDA neutral business; higher proportion of direct expenses given higher voice revenue in FY15 (voice related direct expenses are 17% of FY15 revenue); as voice % declines as % of total revenue, these costs are only 3% of revenue

- IBS: Lower growth in IBS business to result in lower IBS rentals as % of total revenue (IBS rentals were 10% of total FY15 revenue and will decline to 1% in FY20)

Economies of scale to assist in further expansion of margins

Offset by higher installation and right of way costs

Continuous investment in IT systems for automation, better control and increased employee efficiency shall help to keep the growth rate of employees lower than the growth rate of the revenue

13.4%

43.1% 4.7%

18.8%

5.3%

0.9%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

EBITDA (FY15E) Decrease in connectivity expense

Decrease in direct expenses Decrease in personnel expenses

Decrease in Indirect Expenses

Total

% o

f to

tal R

eve

nu

e

Carlyle


Particulars Unit 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Net Profit After Tax USD m -1 2 16 30 58 88

Depreciation USD m 3 5 10 16 22 26

Interest paid on Term Loan USD m 1 1 1 5 8 7

Operating Profit before working capital changes USD m 4 8 27 51 88 121

Adjustment for changes in working capital USD m 0 5 13 7 1 (4)

Cash Flow from Operating Activities USD m 4 13 40 58 89 118

Purchase of fixed assets USD m -2 -29 -78 -98 -80 -53

Cash Flow from Investing Activities USD m -2 -29 -78 -98 -80 -53

Proceeds from issuance of share capital USD m 0 17 33 0 0 0

Proceeds from borrowings USD m 6 0 7 47 4 0

Repayment of Loan (Principal only) USD m -5 0 -1 -1 -6 -10

Interest paid on Term Loan USD m -1 -1 -1 -5 -8 -7

Cash Flow from Financing Activities USD m 0 16 38 41 -10 -17

Net Increase/(Decrease) in cash USD m 2 -1 0 1 -1 48

Cash flow statement

High growth resulting in higher capex

Negative working capital cycle

Total capex of c. US$ 330 m

Source of financing

Debt: USD 58 mn

Equity: USD 50 mn

Rest to be financed via internal accruals

Funding requirements

Carlyle


1) Other Capex includes DAS related capex

Total network equipment roll-out (PODs)

Total Capex per year

Total OFC roll-out (own network excluding partner network)

Capital Expenditure

2,230

9,780 750

1,600

2,200

1,800

1,200

0

3,000

6,000

9,000

12,000


No

. o

f km

s

151

400 25 52

72

60

40

0

50

100

150

200

250

300

350

400


No

. o

f u

nit

s

1 22

57 73

62 43

0

2

8

13 14

11

3

6

8

6

4

2

26

71

94

82

57

0

20

40

60

80

100


US

$ m

Network Capex CPE capex Other capex Total

1 Capex by category Total (US$ m)

Network capex 258

CPE capex 47

Other capex 27

Total capex 332

Carlyle


APPENDIX Global experience in FTTH rollout

A Carlyle


Over 100 countries are adopting FTTH; Asia has been amongst the fastest growing regions

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000

0%

20%

40%

60%

80%

Sou

th K

orea

Hon

g K

ong

Japa

n

Taiw

an

Sin

gapo

re

Chi

na

Mal

ayas

ia

Indi

a

Aus

tralia

New

Zea

land

Via

tnam

Thai

land

Phi

lippi

nes

Indo

nesi

a

Pak

ista

n

Ban

glad

esh

FT

Tx s

ub

scri

bers

(000s)

FT

Tx h

ou

seh

old

pen

etr

ati

on

(%

)

FTTx household penetration, 2012 FTTx subscribers (000s), 2012

Americas

Europe - Economies with highest penetration of fiber-to-the Home / Building + LAN (Dec 2013)

0%

10%

20%

30%

40%

Lith

uani

a

Sw

eden

Latv

ia

Nor

way

Rus

sia

Bul

garia

Slo

vaki

a

Den

mar

k

Por

tuga

l

Slo

veni

a

Est

onia

Finl

and

Hun

gary

Luxe

mbu

rg

Net

herla

nds

Ukr

aine

Turk

ey

Fran

ce

Spa

in

Cze

ch R

epub

lic

Sw

itzer

land

Italy

Rom

ania

Fibre to the Home subscribers Fibre to the Building + LAN subscribers

Asia

FTTH experience across the world

Highest number of subscribers are in China yet bare fairly low penetration. Enormous room for growth

0

5

10

15

20

25

30

Sep '01

Mar '02

Sep '02

Mar '03

Sep '03

Mar '04

Sep '04

Mar '05

Sep '05

Mar '06

Sep '06

Mar '07

Sep '07

Mar '08

Sep '08

Mar '09

Sep '09

Mar '10

Sep '10

Mar '11

Sep '11

Mar '12

Sep '12

Mar '13

Sep' 13

Homes Passed Homes Marketed Homes Connected

2013 Homes Passed: 27.7M

2013 Homes Marketed: 25.5M

2013 Homes Connected: 10.7M

Carlyle


Flag Country Key activity/ Govt. plan

Singapore ● Next Generation Broadband plan started in 2006

China ● Highest number of FTTH connections; will approach 100 million subscribers by 2017, a CAGR of 19% f(2013-17) ● Household penetration of 25% by 2017

Hong Kong ● Reach household penetration of 82% in 2017; ● Growing slowly as penetration is already very high due to early adoption of FTTH

Japan ● Been deploying for many years ● Expected to reach 70% household penetration in 2017

South Korea

● Been deploying for many years ● Expected to reach 73% household penetration in 2017.

Malaysia ● High speed broadband network to connect 1.3 million homes in major cities on FTTH/FTTC network by 2012.

EMEA ● Most of Scandinavia, the Netherlands, and many of the Arab oil states are now reaching FttP penetration levels of more than 50% ● Even Eastern Europe countries such as Estonia, Lithuania and Bulgaria are rolling out

U.S

● A Bernstein study of Google’s rollout of FttP in Kansas City concluded that the penetration measured was much higher at rates of up to 83% in more affluent neighbourhoods and 27% in lower income areas

● Bernstein believes that in three to four years Google will capture 50% or more of potential homes passed with its $70 offering, and at least 10% of the homes passed with the company's ‘free’ 5Mb/s offering (which requires a $300 install fee)

● AT&T that it planned to roll out FttP in 100 American cities and a similar number of municipalities are ready to do the same

FTTH experience for different countries

Carlyle


APPENDIX Key architecture

B Carlyle


Network Architecture - FTTH A. Point of Distribution or Deliveries (PODs)

Defined as network distribution points to connect customers.

Telecom rooms hosting electronics or active network transport devices

The capacities in the network are planned and deployed at PODs

B. Outside Plant (OSP)

This is the physical media - optical fiber network connecting PODs - serves as the infrastructure for any wide area network

The last mile connecting the buildings is also part of OSP network

Networks can be Underground or Aerial (Overhead)

C. Inside Plant (ISP)

This is the physical passive access network within a building or a flatbed area

ISP Network installation includes

— Underground : Can use trenched or trenchless technique or will use existing laid channel / Pipe.

— Structured cabling : This is further divided in to 1. Cable installation using cable tray inside basement or a room , horizontally 2. Cable installation inside a communication / LV Shaft, vertically.

Floor Distribution Box : installed at the telecom shaft / LV shaft at Floor level, provides safe junction point between riser cable and customer connectivity cable.

Fiber termination box (FTB) : Fiber Termination Box is installed inside the customer premises and OFC from Floor Distribution Box to customer premises terminates in it.

Carlyle


Spectranet Video Transport Solution provides uncompressed feed on Optical fiber to Media companies from event locations to media play out and production centers and further to satellite up-link teleports

Network Architecture – Media Connect

Carlyle


Declining mobile service quality on account of increased voice and data traffic and poor signal coverage, leading to increasing demand for better in-building coverage solutions

Typical IBS Overview

In-building solutions architecture

What is IBS?

● Solution to provide coverage in targeted locations,

moving radios closer to the subscriber, and to provide

additional call and data-handling capacity in areas with

concentrated demands for wireless services

● Network of antennas placed indoors that are connected with cabling to a “hub” - serves as an indoor antenna system, which is owned and managed by IBS Operator

● System is neutral host - the hub allows multiple wireless service providers to connect radios that transmit at various frequencies (2G/3G/4G).

Why do we

need IBS?

● Mobile Technologies were designed primarily for outdoor use - Usage pattern shows > 60% calls are indoors

● Quality expectations is increasing; whereas Indoor

coverage is a key challenge

● Poor quality due to Interference on very higher floors - Voice Crackling, Call Drop

● Poor network coverage on higher floors, car parking, basements- No Signals

● Capacity Issue on lower floors - Frequent Call Drops

Carlyle

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