RCOMs subsea cable business

April 2012

Overview of RCOMs subsea cable business

Operates one of the worlds largest private subsea cable networks Assets Covers six of the eight major global data traffic routes Metropolitan networks in 25 countries and 45 cities Nine owned data centres

Customers

386 ISPs, content providers, mobile carriers, and telecom operators

Products

International data and internet connectivity products: IRU, O&M, IPLC, IP, restoration and co-location

Source: Companys data, TeleGeography

Investment highlights

Presence in key markets and global reach

High entry barriers Cost, Time, Right of Way

Significant available capacity, low incremental upgrade costs, long useful life

High quality network, Global Ethernet enabled Low latency IP

Strong customer relationships

4x IP traffic growth expected over next 5 years

Contents

Section 1 The Global Telecommunications Infrastructure Industry 2 Overview of assets 3 Sales & customers

1 8 23

Section 1
The Global Telecommunications Infrastructure Industry

Evolution of the Global Telecommunications Infrastructure Industry

Introduction of the first Trans-Atlantic optical fibre cable with 100 km repeaters

Introduction of satellite transmission to augment optical fibre capacity and provide a backup system

Introduction of subsea Branching Unit (SBU) enabled the utilization of local and express routes

Construction of the first two privately owned subsea cables

In 2001-2002, the industry witnessed bankruptcy and reorganisation of operators including Global Crossing, Asia Global Crossing, 360 Networks, FLAG, and MCI WorldCom

1980

1990

2000

2010

First Trans-Atlantic subsea fibre optic cable system built in 1988, TAT-8, consisting of 35 consortium operators

In 1991, the first private subsea cable system, PTAT-1, was constructed

A total of US$22 billion was invested in subsea cable systems between 1999 and 2001 to support the anticipated growth in internet usage

Expected growth of internet usage did not materialise as anticipated, leading to excess supply of capacity

Over the last 10 years, few new cables were constructed following the bust of the industry. However, bandwidth demand began to grow rapidly, leading to a slowdown in price erosion

Source: Companys data

Subsea cable design

Metro PoP Area

PoP- Point of Presence

Metro land backhaul links Cable Landing Station Metro PoP Area

Cable Landing Station

Subsea repeaters

Branching Unit

Metro PoP Area

Metro PoP Area

Source: Companys data

Cable Landing Station

Cable Landing Station

Evolution of fibre transport technology

Time frame

Technology evolution Wave Division Multiplexing (WDM) and Zero Dispersion Shifted Fibre (ZDSF)

Technology

Per fibre pair capacities (in Gigabits)(a)

Late 1990s

2.5G

5 (2x2.5G)

Early 2000

10G

320 (32x10G) to 640 (64x10G)

2009 Dense wave Division Multiplexing (DWDM) and Non-zero Dispersion Shifted Fibre (NZ-DSF) 2012 2013

40G

1,600 (40x40G) to 2,560 (64x60G)

100G

2,900 (29x100G) to 6,400 64x100G)

2014 2015

500G

Estimated 10,000 (20x500G)

(a) Per fibre pair capacities is dependent on age of the fibre, fibre characteristics, technology deployed and link length. Source: Companys data

Technological advancement of fibre optic cables

Advancements in optical technology have dramatically increased the capacity of subsea fibre optic cables Extended useful life of existing subsea cable systems by 10-15 years

Enabled capacity upgrades for existing cable systems as compared to building new subsea cables, with marginal cost

Upgrades to existing cables using new technology often exceed original design capacity of the cable systems High barriers to entry Average time to build new cable systems is 3-4 years, while average time to complete capacity upgrade is 6-12 months

Investment in new cable systems is significantly higher than upgrading existing cable systems

The capacity upgrades often exceed the original design capacity of the system Congested Right of Way for laying new cables is becoming a problem in the most important interconnection cities, including New
York, London, Alexandria, Suez, Tokyo, Taipei, Seoul

Source: Companys data

Four key trends are driving the growth in IP traffic

Increasing number of devices

By 2015, there will be nearly 15 billion network connections via devices (up from 7 billion in 2010), including machine to machine, and more than 2 connections for each person

More internet users

By 2015, there will be nearly 3 billion internet users more than 40% of the worlds projected population

Faster broadband speed

Average fixed broadband speed is expected to increase four-fold from 7 Mbps in 2010 to 28 Mbps in 2015. The average broadband speed has already doubled in the past year from 3.5 Mbps to 7 Mbps

More video

By 2015, 1 million video minutes the equivalent of 674 days will traverse the internet every second

Global IP traffic has increased eightfold over the past 5 years and will increase fourfold from 2010 to 2015, resulting in a CAGR of 32%
Source: CISCO VNI (Visual Networking Index) Forecast of June 1, 2011

Global IP traffic is expected to grow 4x between 2010-2015

Central / Eastern Europe

North America
2.2 billion

Western Europe
2.3 billion

902 million

20 Mbps (229%)

36 Mbps (290%) 27 Mbps (266%) 18.9 EB/month (295%) 22.3 EB/month (218%)

3.7 EB/month (424%)

Japan
727 million

63 Mbps (312%)

Asia-Pacific Latin America

1.3 billion 7 Mbps (154%)

Middle East / Africa

1.3 billion

5.8 billion

4.8 EB/month (235%)

25 Mbps (359%)

24.1 EB/month (350%)

8 Mbps (191%)
2.0 EB/month (699%) 4.7 EB/month (604%)

Source: CISCO VNI (Visual Networking Index) Forecast of June 1, 2011

Connection

Broadband speeds

IP traffic growth

Connections will double and speeds will quadruple by 2015

2015

3 Billion
Global internet users

14.6 Billion
Global network connections

Annual Global IP Traffic

966 Exabytes
7.2 Billion
Worlds 2015 Population

24.8 Gigabytes
Traffic generate by average internet user per month January 2015

28 Mbps

1.9 Billion
Global internet users

7.4 Billion
Global network connections

300%
100,000,000 100,000,000

Average Global Fixed Broadband Speed Growth

2010
Source: CISCO VNI (Visual Networking Index) Forecast of June 1, 2011

January 2010 7.0Mbps

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Section 2
Overview of assets

RCOMs subsea cable assets

FA-1 FEA HAWK

(a)

FALCON FNAL Backhaul

RCOMs subsea cable assets have a market share of 20% of all capacity sold across its six routes
Source: Companys data, TeleGeography

RCOMs subsea cable assets are privately owned and covers six out of eight major global routes

Routes Cables FA-1 India-West India-East Middle East-West Middle East-East Intra-Asia Trans-Atlantic

FEA

FNAL
Tbps

Lit capacity

FALCON

HAWK

Europe Asia Intra Asia Trans-Atlantic Sub-total Trans-Pacific Latin America Total RCOMs share of routes

7 11 16 34 12 8 54 63%

The routes covered by RCOMs subsea cable assets collectively account for 63% of the global data demand as measured by lit capacity
Source: Companys data, TeleGeography

RCOM has a market share of 20% of capacity sold on its routes

Market share of lit capacity across 6 routes (Gbps)(a) Total capacity sold by market Capacity sold by RCOM Market share

India-West

700

134

19.0%

India-East

567

31

5.4%

Middle East-West

601

345

57.4%

Middle East-East

218

31

14.1%

Intra Asia

9,493

1,730

18.2%

Trans-Atlantic

13,036

2,531

19.4%

Total
(a) Excludes IP services Note: as of 31 December 2011 Source: Company's data, TeleGeography

24,615

4,800

19.5%

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Competitive advantages of RCOMs cable systems

Wholly-owned cables with strong regional connectivity

Benefit of cable assets on key routes

Significant saleable capacity

Substantial remaining useful life

Landing stations at strategic locations

11

Wholly-owned cables with strong regional connectivity

Private subsea cable operators have greater flexibility in operating cable systems
Concurrence of all members of the consortium not required for upgrades Network changes, routing, and terrestrial backhaul upgrades can be done independently Ease of linking new landing stations to existing subsea system Easier to adopt new, cutting edge technology i.e. 10G to 40G to 100G Simpler to execute strategic deals Regional capacity sales, presales of capacity with future pricing

No internal price competition as private operators maintain 100% control over its inventory

Source: Companys data

12

Benefit of cable assets on key routes

Existing operators have significant advantages over new entrants due to the construction cost of subsea fibre cables
Upgrade existing system cost ~US$50m-US$75m from 10G to 40G versus cost of ~US$800m-US$900m for new build

The cost of subsea fibre cables (with repeaters) represents approximately:

90% of the costs for linear systems 2x cable landing stations 80% of the costs for multi systems 5-7x cable landing stations

Source: Companys data

13

Significant saleable capacity

Route(a)

Design capacity(b) at 40G (Gbps)

Installed capacity(c) (Gbps)

Current lit capacity(d) (Gbps)

India-West

9,560

2,710

580

India-East

240

170

55

Middle East - West

9,880

3,740

960

Middle East - East

240

170

55

Intra -Asia

10,120

6,530

1,860

Trans-Atlantic

18,720

4,750

2,840

Total

48,760

19,430

6,350

(a) As of 31 December 2011 (b) Design capacity at 40G is defined as the maximum capacity of a cable between the start and end points if it were upgraded to 40G (c) Installed capacity is defined as the maximum capacity available between the start and end points of a cable (d) Current lit capacity is defined as the capacity available or being used currently between the start and end points of a cable Source: Companys data

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Substantial remaining useful life

Subsea cable

Year of completion

Stated life at completion

End of design life

FEA

November 1997

25

2022

FA-1

June 2001

25

2026

FNAL

July 2002

25

2027

FALCON

September 2006

25

2031

HAWK

April 2011

25

2036

Source: Companys data

15

Landing stations at strategic locations

A total of 46 landing stations with 31 partners, in the following countries:

China India Japan Korea Malaysia Thailand Egypt UAE Jordan Saudi Arabia Italy Spain UK

Qatar Bahrain Iraq Kuwait Yemen Republic of Maldives Hong Kong Sri Lanka France Cyprus Iran Sudan US

Taiwan

Oman
16

Cable systems
Third-Party Networks

Subsea Cable

Route

Purpose

Capacity (Gbps)

Length (Rkm)

Tata Trans Pacific

Japan to United States

Resale

550

22,300

Japan US

Japan to United States

Resale

22,682

SMW4

France to Singapore

Resiliency and diversity

100

38,000

EAC

Singapore to Hong Kong

Resiliency and diversity

15

19,500

C2C

Singapore to Hong Kong

Resiliency and diversity

10

17,000

APCN2

Singapore to Hong Kong

Resiliency and diversity

19,000

Total

678

138,482

Flexibility to purchase capacity on an as needed basis at market price to complement its own systems from a combination of private operators or consortium cable members to meet specific customer requirements
Source: Companys data

17

Metropolitan network
Europe

Europe Ring FA-1 Ring

Europes metropolitan network allows flexibility to connect to multiple data centres and Meet Me Rooms (MMR)
Source: Companys data

18

Metropolitan network
Egypt

New Ring Existing Ring

Four routes across Egypt which makes it one of most resilient network globally. The metropolitan network crossing Egypt is the most vulnerable terrestrial fibre segment between (i) Europe and India and (ii) Middle East and Asia for fibre cuts
Source: Companys data

19

Metropolitan network
United States

The US Metropolitan network connects FA-1 cable landing stations to data centres in the Eastern US namely 111 8th Avenue, 60 Hudson, 325 Hudson, and 165 Halsey, extending up to Equinix Ashburn
Source: Companys data

20

Data centres

Owns nine data centers in the US, UK, France, Hong Kong, and Taiwan with a total potential floor space of approximately 85,000 square feet
# of data centers
3 2 2 1 1

Country USA UK France Hong Kong Taiwan Total

Floor space (000 sq ft)

27.98 21.39 18.68 12.32 5.38 85.75

Provides carrier neutral functionality at key business hubs offering open access to all carrier customers
Source: Companys data

21

Network asset strategy

Sophisticated subsea cable network design

Express routes allow lower latency Leverage on owned asset Local routes provide connectivity to underserved markets
Providing connectivity on six of eight routes, reaching 46 landing stations in 26 countries Extensive Metropolitan network in Europe, plus diverse terrestrial backhaul in US, Egypt, India, and Japan Global reach, routes covering 63.0% of the global data demand Private subsea cable operators vs Consortium subsea cable operators

Less subjective to price competition

Low latency routes:

Differentiation

FA-1 offers the lowest latency route between: Paris and New York: 70.92 ms RTD Slough and New York: 64.877 ms RTD Skewjack and Northport: 59.5 ms RTD HAWK offers the lowest latency route between Cyprus and London: 48.2 ms RTD
Route diversity: Offering 2 systems on most routes Demand growth outpacing price erosion

Growth plans

Existing cables will remain in service longer due to technological advances Offer competitive pricing to customers in key regions of the world 10G to 40G technology allows existing cable systems to increase capacity 2.4x to 3.5 x for marginal incremental cost vs new cable

Technology

builds
100g technology which is expected to be available by the end of 2012 allows existing 40G cable systems to increase capacity by

approximately 2.0x to 2.5x Price erosion vs demand growth

Source: Companys data

Demand for international internet bandwidth has more than doubled over the past two years, offsetting the price erosion in the range

of 20-30% for routes covered by RCOMs cable systems

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Section 3
Sales & customers

RCOMs subsea cable business customers

Customer diversity
Revenue breakdown by customers Revenue breakdown by geography
United States 13% Other customers 38% Top 20 customers 34% Middle East 29% Europe 13%

Asia 17% RCOM 28%(a)

(a) The large increase of revenues from RCOM is due to the increase in 3G data usage in India Note: For the nine months ended December 31, 2011 Note: For the nine months ended December 31, 2011

India 28%

Loyal customer base

FY2009 Number of customers Number of multi-product customers Number of customers > 3 years 448 200 75% FY2010 447 228 75% FY2011 410 271 70% 9M ended Dec 2011 386 194 70%

Equal access and carrier-neutral strategy allows it to cultivate relationships with multiple companies in each market in which it operates
Source: Companys data

23

Global sales network

Regional office map

London

New York Ashburn Dubai Mumbai Hong Kong

Sales and marketing team (number of employees)

FY2009 Marketing & product management Sales and sales force Total sales and marketing team 40 80 120 FY2010 31 74 105 FY2011 18 73 91 9M ended Dec 2011 14 72 86

24

Customer and sales strategy

Account management

Every customer has a dedicated Account Manager to address their requirements and ensure end -to-end support on all aspects

of the Sales process from quote to cash i.e. presales support, contract negotiations, pricing, delivery, service assurance and billing

Sales and marketing

Differentiation from our competition on value proposition End-to-end ownership of our infrastructure that offers greater flexibility and end-to-end service The trusted partner for our customers network infrastructure needs

Benchmarking prices in line with current market, while maintaining the desired profitability of the organisation Pricing positioned as per competitive intelligence, volume discounts, contract terms and aligned to specific customer requirements

Pricing

Pricing based on partnership arrangements with various suppliers in different regions, for B-end termination requirements Forward / customized pricing based on volume and strategic value

Specialized pricing on new technologies/routes based on financial models

25

Customer and sales strategy (continued)

Cross selling

Promotional offers for various products on periodic basis for cross selling and upselling

Development of new products and services

Increase the revenue market share of the carrier business through the effective management of the existing product portfolio and

through the introduction of new services / enhancements across the transmission services, IP services, and co-location services
Develop the product roadmap and long term business strategy in line with customer requirements, to leverage technological

advances in the market place

Attracting the right customer and getting them to buy often and in higher quantities

Customer Loyalty

A major portion of our business is through repeat orders from our existing customers 70% using services for more than 3 years Provide high levels of service quality to build and maintain customer loyalty

A large percentage of our staff are educated to the degree level and are actively encouraged and supported to gain technical

Training & education

qualifications and professional memberships of key technical institutions

Regular training on all systems and equipments is mandatory for all operations staff Sales organisations are regularly imparted product training and notified about changing market dynamics through internal product

advisories / newsletters to build awareness

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Investment highlights

Presence in key markets and global reach

High entry barriers Cost, Time, Right of Way

Significant available capacity, low incremental upgrade costs, long useful life

High quality network, Global Ethernet enabled Low latency IP

Strong customer relationships

4x IP traffic growth expected over next 5 years

27