Overview of financing opportunities in the TMT space in Asia

1. Overview of financing opportunities in the TMT space in Asia Amrish Kacker, Lim Chuan Wei February 2010

2. Contents Introduction About Analysys Mason Financing opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

3. Introduction • With the thawing of capital markets in the wake of the financial crisis, financing activity worldwide, including in Asia, is widely expected to pick up in 2010 • Within the TMT sectors, financing opportunities – both new and those postponed previously due to the crisis – should emerge or resurface quickly in the immediate period • This brief presents Analysys Mason’s perspectives and insights into the financing opportunities for the TMT sectors in Asia • The remainder of this document is structured as follows: • About Analysys Mason – a short introduction on who we are and what we do • Financing opportunities in the Asia–Pacific region – our views on what financing opportunities may be available, why they would interest financial institutions, and which are the most attractive to pursue • Our general methodology – our analytical methods for supporting such opportunities • Our due diligence expertise – our capabilities and experience in transactional support and due diligence

4. Introduction About Analysys Mason Financing opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

5. Strategy Market intelligence Planning Review Implementation About Analysys Mason Analysys Mason is the world’s premier adviser in telecoms, IT and media Global presence and experience Integrated service offering Assignments completed Analysys Mason office • Through our global presence, we deliver strategy advice, operations support and market intelligence to leading operators, regulators, financial institutions, broadcasters, vendors and enterprises in over 80 countries • Our people have had a major influence on the industry for more than 20 years: • led the liberalisation of telecoms across Europe and Asia and mediated in policy issues for operators and regulators • supported several hundred transactions and licence acquisition processes for operators and financial institutions • provided strategic and operational support to major operators in the roll-out and expansion of businesses across the sector, enhancing enterprise value

6. About Analysys Mason Our consulting advice is valued across all sectors Enterprise users Helping to maximise returns from Financial Public sector investment in ICT institutions Providing ICT and In particular, we have provided commercial and technical due diligence services to financial institutions and mobile and fixed operators worldwide Supporting procurement advice vendors, sellers for emergency Regulators and financiers services and public of industry bodies transactions Establishing and implementing policy frameworks in telecoms Fixed operators Mobile operators and media markets Defining new Delivering value strategies, through strategy optimising service planning and portfolios and implementation Media companies supporting policy development Helping to maximise revenue in converging markets

7. Impact of mobile broadband • WiMAX – threat or opportunity? • Revenue-maximising pricing propositions • RAN sharing and other cost reduction strategies • OSS/BSS optimisation • Evaluating advertising opportunities Mobile • Next-generation access strategies: FTTx versus wireless • Wholesale product definition in NGNs • Strategies for fixed–mobile convergence • Value migration from infrastructure to services and content • Efficient NGN procurement processes • OSS/BSS and customer support Broadband • Capitalising on the digital dividend • Regulatory environments to deliver NGAand NGN • TV regulation in a converging market • Effective spectrum management strategies • Licence allocation and acquisition processes Regulation • Content distribution strategies in a converging market • Creation and distribution of ‘three-screen’ services • Maximising value of advertising inventory • Delivery of end-user experience • Regulation for a converged industry • Assessing the impact of media players entering the telecoms market Media • ICT consolidation and cost optimisation • Service fulfilment and assurance • OSS/BSS legacy migration • OSS/BSS process optimisation • WAN acceleration • Construction, location and optimisation of contact centres and control rooms ICT infrastructure About Analysys Mason Our success is built upon a deep and rigorous understanding of key sector issues

8. About Analysys Mason We have an established track record of working with the major financial institutions • Analysys Mason has undertaken over 100 due diligence assignments since 2002 • We have undertaken a similar number of projects in support of vendor financing, M&A and private placements • We have worked with a wide range of operators, investment banks, private equity firms, strategic investors and governments

9. About Analysys Mason We have in-depth market experience in the Asia–Pacific region to help financial institutions evaluate opportunities … Project experience in the Asia–Pacific region by sector Company experience Additional project experience of core Singapore team

10. 7 6 5 4 1 2 8 9 3 13 Assignments completed 11 12 10 14 1 5 9 13 14 15 16 2 6 10 7 11 3 15 16 4 8 12 About Analysys Mason … having worked on a variety of projects across the region Selected projects in the Asia–Pacific region Development of a detailed cost accounting system Estimation of revenue forecast in China for mobile broadband services Comprehensive mobile LRIC cost study for a mobile operator, to calculate termination (a) Several studies for a mobile operator, including assessment of telematics and FMC. (b) For a content player, devised an entry strategy into the European market. Review of strategic rationale for proposed merger between two operators (a) Assessed a mobile operator’s business model to evaluate a 3G opportunity. (b) Due diligence of integrated telecoms and media operator. Due diligence of cellular operator (a) Due diligence of an integrated wireline and wireless operator. (b) Supported an integrated operator in growing its international voice business. Study of regulation and competition in the wireless local loop market Business planning for WiMAX new entrant A range of projects for a mobile operator, including business planning, compensation negotiation and 3G licence support (a) Evaluated the 3G opportunity and alternate business structures for a mobile operator. (b) Mobile operator’s MVNO strategy and wholesale pricing. (c) WiMAX business planning for new entrant (a) Pricing strategies for an incumbent operator. (b) Due diligence of CDMA WLL operator / WiMAX licence holder (a) Due diligence of a mobile operator. (b) Assessed strategic options in infrastructure sharing / MVNOs for new 3G operator. (c) WiMAX business plan for a new entrant For Vodafone Australia, undertook a critical review of a bottom-up mobile network cost model developed on behalf of the regulator. Provided expert advice on the TSLRIC for both LLU and co-location services.

11. Introduction About Analysys Mason Financing opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

12. Financing opportunities in the Asia–Pacific region Markets are recovering, and players in the TMT sectors are looking to take advantage Recovery trends in major Asia–Pacific stock indices Shanghai Composite (2009) Nikkei 225 (2009) India BSE 30 (2009) Straits Times Index (2009) Source: Yahoo Finance

13. Financing opportunities in the Asia–Pacific region Financing requirements will arise from network deployments, M&A and new transmission platforms Network deployments • Some operators in the region, particularly in emerging markets, are undertaking network expansion and upgrades • As expanding or upgrading networks is capital intensive, operators will be looking for financing to support these efforts With the pick-up in activity in the TMT sectors, operators will increasingly seek financing to back new or postponed projects This likely increase in demand for financing presents opportunities for commercial banks and other financial institutions M&A • M&A activity is expected to pick up further in the next year, with various opportunities in the TMT sectors across Asia • On the buy-side, PE firms and strategic investors will be seeking financing to support their acquisitions New transmission platforms • With some markets in the region on the verge of issuing 3G and/or WiMAX licences, telecoms operators – both incumbents and new players – will be looking for financing to back their forays into new technologies • Some mobile/cable operators will look into fibre optic roll-out to support additional revenue generation

14. Financing opportunities in the Asia–Pacific region Network deployment activity in the region will be driven by network expansion, upgrades and greenfield deployment China • Chinese operators are rolling out 3G networks after receiving their licences, but funding support will likely be tied up by Chinese banks India • Regional operators in India are looking towards national expansion … • … while impending 3G/WiMAX licensing will trigger further network deployment and upgrades (est. USD2 billion) Regional • Some players in East and South East Asia are exploring potential regional WiMAX deployments Vietnam • Operators in Vietnam are just beginning to roll out their 3G networks with the recent issuance of 3G licences in 2009 Bangladesh • 3G and WiMAX licences are expected to be issued in 2010, which will trigger network deployment (est. USD300 million) Thailand • 3G and WiMAX licensing in Thailand have stalled … • … but operators will be looking to kickstart network deployment and upgrades when and if the process gets back on track (est. USD300 million) Indonesia • Indonesian operators are pushing forward with WiMAX deployment

15. With the thawing of capital markets in the second half of 2009, M&A activity has begun to pick up There was reportedly a 32% increase in number of worldwide M&A transactions in 4Q 2009 M&A activity is expected to continue heating up into 2010 180 156 155 160 140 120 104 100 92 Deal value (USD billion) 86 +30% 80 61 58 60 47 40 20 0 4Q 2007 1Q 2008 2Q 2008 3Q 2008 4Q 2008 1Q 2009 2Q 2009 3Q 2009 Financing opportunities in the Asia–Pacific region M&A activity is widely expected to heat up in 2010 Effective M&A deal value in Asia-Pacific, by quarter (USD billion) Quotations from industry “The future looks encouraging for M&A with strong indicators in the last quarter…we anticipate deal activity to increase in 2010…” Neil Masterson, Global Managing Director of Investment Banking, Thomson Reuters “Global M&A activity would rise as much as 35% in 2010 as improving economic conditions bolster dealmaking…” Research firm Sanford C. Bernstein "The relatively high volume of deals recorded in the fourth quarter of 2009 hints at a resurgence of M&A activity for the new year…" Research firm Dealogic Source: Thomson SDC, press releases, Analysys Mason

16. Financing opportunities in the Asia–Pacific region The roll-out of new transmission platforms such as 3G, WiMAX, and fibre will create a need for financing 3G • Markets such as India and Bangladesh (and possibly Thailand) are on the verge of licence issuance – financing support will likely be required for bid submissions as well as network roll-outs • In Vietnam, licences have recently been issued, and operators will be looking for more funding to build the network, as well as to develop and market their 3G services • Other operators are looking to expand their 3G networks WiMAX • Markets such as India and Bangladesh (and possibly Thailand) are on the verge of licence issuance – financing support will likely be required for bid submissions as well as network roll-outs • Existing WiMAX players in the region are looking to expand their operations, both domestically as well as regionally • In Indonesia and possibly Taiwan, consolidation is expected between WiMAX players Financing requirements driven by the deployment of new transmission platforms Fibre optic • Some operators in the region have embarked on fibre optic roll-out of the core and/or access network • cable operators, for instance, are upgrading their infrastructure to better compete • some mobile operators are investing in fibre to enter the broadband space • mobile operators are also upgrading their core/backbone infrastructure

17. Financing opportunities in the Asia–Pacific region In East Asia, the largest financing opportunities are likely to be in China Assessment of opportunities in East Asia 1 High 2 MEDIUM ATTRACTIVENESS HIGH ATTRACTIVENESS 2 1 3 4 4 Possible funding requirement 3 5 5 6 6 7 MEDIUM ATTRACTIVENESS 7 Low Low High Possibility If you are interested in discusssing any of these opportunities further, please contact Amrish at amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com

18. Financing opportunities in the Asia–Pacific region The possible restructuring of PCCW remains an opportunity to watch What is happening? • PCCW has been exploring potential restructuring options for sale of its assets, but has not been successful • Most recently, PCCW dropped a privatisation bid in April 2009 after regulators blocked the plan due to allegations of shareholder manipulation • It remains possible that PCCW will renew such efforts in the wake of a pick-up of activity in capital markets How Analysys Mason can provide support • We are able to provide commercial and technical pre-due diligence, and due diligence services in support of this opportunity • These include: • review of the Hong Kong telecoms market • review of the competitive environment • review of business plan and potential risks • review of network assets • valuation of stake and identification of possible downsides Why this is of interest • A potential buyer looking to take a stake in PCCW could seek financing support • Given the likely size of this deal, the financing requirement could be substantial

19. Financing opportunities in the Asia–Pacific region In South Asia, the most compelling opportunities are in India Assessment of opportunities in South Asia 3 1 High MEDIUM ATTRACTIVENESS HIGH ATTRACTIVENESS 2 1 2 3 Potential funding requirement 4 4 5 MEDIUM ATTRACTIVENESS 5 Low Low High Possibility If you are interested in discusssing any of these opportunities further, please contact Amrish at amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com

20. Financing opportunities in the Asia–Pacific region In South-East Asia, 3G and WiMAX deployments would likely drive needs for financing support Assessment of opportunities in South-East Asia 1 High MEDIUM ATTRACTIVENESS HIGH ATTRACTIVENESS 2 1 2 3 3 Potential funding requirement 4 11 5 10 5 4 6 6 MEDIUM ATTRACTIVENESS 7 8 Low 7 9 8 Low High 9 Possibility 10 11 If you are interested in discusssing any of these opportunities further, please contact Amrish at amrish.kacker@analysysmason.com or Chuan Wei at lim.chuan.wei@analysysmason.com

21. Financing opportunities in the Asia–Pacific region Operators in Vietnam are now in the process of making the transition to 3G How Analysys Mason can provide support • We are able to provide commercial and technical pre-due diligence, and due diligence services in support of potential investments in Vietnam • These services include: • review of the Vietnam mobile market • review of the Vietnam regulatory environment • review of the competitive environment • assessment of new entrant threat • review of the technology landscape, including 3G, and implications for target • review of target’s business plan and potential downsides, especially with 3G • valuation of target and review of bid What is happening? • 3G licences were issued in 2009, and all three operators (Viettel, Vinaphone and Mobifone) are now rolling out 3G networks and services Why this is of interest • The roll-out of 3G networks and services means that Vietnamese operators will be in need of capital to fund their network and technology upgrade

22. Introduction About Analysys Mason Financing opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

23. Our assignments cover all sectors of the TMT market: we have undertaken due diligence on numerous mobile, fixed and cable network operators, carriers, equipment vendors, broadcast operators, tower companies and solutions providers We have significant experience in working on both the buy-side and sell-side of due diligence We have a comprehensive knowledge of technologies, networks and operations throughout the various sub-sectors of the telecoms market Our structured methodology, supported by rigorous research, ensures that: we address all key issues, for example, cross-checking business model revenue forecasts with a top-down, macroeconomic affordability analysis we meet tight deadlines, and can deliver a red-flag report two weeks into a project, to provide early warning of any critical issues Our broad international project experience and access to in-house benchmarks, combined with proprietary tools and proven techniques, provide a framework for robust forecasting of key telecoms indicators, identifying and assessing sensitivities, covenant setting and monitoring We have in-house network design and operations consultants who can provide: high-level network designs to test network capability and capex projections aligned with business and market plans the ability to deliver telecoms services on a timely basis and to optimise the customer experience while minimising opex and assuring revenue Fixed Wireless Cable ISP Carriers Satellite Application Equipment Virtual Our general methodology Our focus has made us the adviser of choice for due diligences of companies within the TMT sectors

24. Our general methodology With our structured approach, we address all the commercial and technical issues efficiently and robustly

25. Potential deliverables High-level red-flag report based on interviews and information available from the data room Short report focusing on key questions already identified during the first phases Review of management’s assumptions and key market and profitability drivers Full review of the management’s detailed operational plan Development of company’s business plan based on public information integrating information from the data room integrating inputs from other due diligence workstreams (e.g, accounting, legal) consistent with data from management interviews and with the regulatory horizon including sensitivities on key parameters highlighting critical inputs Comprehensive strategic review of the company going forward Complementary and comprehensive technical due diligence report, drawing on our expert technical and operations consultants Due diligence documentation including bid book, information memoranda, presentations to investors, market and business models 22-Feb 23-Feb 24-Feb 25-Feb 26-Feb 27-Feb 28-Feb 10-Mar 11-Mar 12-Mar 13-Mar 14-Mar 15-Mar 16-Mar 1-Mar 2-Mar 4-Mar 5-Mar 7-Mar 3-Mar 6-Mar 8-Mar 9-Mar T F S S M T W T F S S M T W T F S S M T W T F Due diligence Management presentation Data room <---- ---- ---- ---- One-on-one Site visits (on request) Submission deadline Deliverables <---- ---- ---- Due diligence reports Business plan validation <---- ---- ---- <---- ---- ---- Preliminary valuation Final Board presentation Board meeting Final documentation Financing Finalise financing case Proposal to credit committee Credit committee approval On-site presence Indicative range of deliverables Our general methodology Analysys Mason can tailor its approach to the specific needs of a due diligence Illustrative timeline of a due diligence

26. Our general methodology The objective of a technical due diligence is to identify and mitigate investment risk in technology and operations • Technical due diligence provides a substantiated capex and opex position, highlighting and quantifying potential risks and unrealised benefits to help develop a robust business plan • Telecommunications networks and operations require significant investment, up to the order of billions of pounds • From a cost point of view, the business case for a telecommunications service, or portfolio of services, is driven by network and operations capex and opex • Under-investment, or untimely investment, can lead to: • not being able to meet market demand • not being able to maximise revenue and profit • poor services, poor customer experience, high churn, a poor brand and, ultimately, low customer acquisition/market share • Over-investment, or investment in sub-optimal technology, can lead to stranded assets, an inefficient operation, and therefore an unprofitable business • When investing in telecommunications networks and operations, the investor must be confident that the budgeted capex and opex is optimised to support the business and market plan

27. Our general methodology Our process delivers key benefits that help ensure a successful business plan • In particular, the benefits that we have identified, include: • ensuring that the network and operations can deliver the market plan from a capability, timing and budget point of view • placing a focus on leveraging technical and operational synergies, and mitigating against future risk • optimising the value of major financial investment • clearly defining the required network/systems, operational strategy and technology roadmap • preventing stranded technical assets • clearly identifying material risk, and providing an appropriate actionable mitigation plan • financially quantifying material business risk • driving towards an efficient operation • developing a robust business case supported by realistic, optimised and benchmarked capex and opex

28. Our general methodology A rigorous methodology is key to delivering value, often in short timescales and complex environments Information gathering High-level review and red-flag report ‘As is’ review ‘To be’ requirements definition Gap analysis and recommendations • Issue request for information (RFI) document • Undertake interviews of key personnel • Visit and examine key operational sites • Walk through key processes with operational staff • High-level review of key documents • Analysis of key financial and operational benchmarks • Initial identification of major risks to be examined in more detail, potentially by all parties in the due diligence project • Review and document current network, systems and operations: • technology • design • dimensioning • processes • capex • opex • Driven by the business and market plan • Determine required technology road map to deliver services • Determine network/ systems, high-level design and dimensioning • Determine required capex and opex budget • Determine incremental technology strategy, network and systems plan • Quantify investment required for current business • Quantify investment required to meet future network and operations to deliver market plan A key challenge to delivering a due diligence project is obtaining the required information in a short period of time As well as focusing on key documentation, if it is available, our highly experienced technical consultants are able to ask critical questions, the answers to which have significant business impact

29. Our general methodology We create value for clients through our independence, in-depth experience and multi-disciplined consultants (*) This is done anonymously to maintain strict commercial confidentiality

30. Introduction About Analysys Mason Financing opportunities in the Asia–Pacific region Our general methodology Our due diligence expertise

31. Our due diligence expertise We have extensive due diligence experience across Asia, Africa and Europe Europe Asia Albtelecom (2007) AKTEL (2008) Altice (2005) Etisalat (2008) Armentel (2006) Excelcomindo (2007) Astelit (2005) PacketONE (2008) Avea (2006) PTCL (2005) Baltkom (2007) Sky Mobile (2007) BITE (2007) Swan Telecom (2008) BSkyB (2008) Africa BTC (2007) Atlantique (2004) Cabovisao (2004) Transaction support in Europe Camtel (2007) Cesky Telecom (2002) Transaction support in Asia Transaction support in Africa Cell C (2006) Cinven (2009) Other Analysys Mason projects Calyon (2009) Eircom (2006) Libertis (2005) EMKTV (2004) Monaco Telecom (2004) tele.ring (2005) Maroc Connect (2006) Fastweb (2007) Telekom Slovenije (2007) NMT (2006) MTN (2007) Globul (2002) Numericable (2006) Telekom Srpkse (2004) Multilinks (2007) GTS (2007) On Telecom (2006) Thus (2005) Nitel (2005) Lattelekom (2007) ONE (2007) Turk Telecom (2005) Safaricom (2007) LycaTel (2009) ONO/Auna (2005) Voxtel (2004) Telecel de Loteny (2004) Magticom (2007) RCS (2006) VTH (2001) Tunisie Telecom (2006) Mobilkom (2004) Starman (2007) Zapp (2004)

32. We support debt and equity financing of the telecoms sector Our due diligence expertise

33. We support operators/vendors in fulfilling M&A opportunities … Our due diligence expertise … and support operators with ‘fast-close’ financial reporting

34. Our due diligence expertise Selection of our due diligence work in Asia [1/3]

35. Our due diligence expertise Selection of our due diligence work in Asia [2/3]

36. Our due diligence expertise Selection of our due diligence work in Asia [3/3]

37. Our due diligence expertise Selection of our experience undertaking due diligences of major mobile operators [1/3]

38. Our due diligence expertise Selection of our experience undertaking due diligences of major mobile operators [2/3]

39. Our due diligence expertise Selection of our experience undertaking due diligences of major mobile operators [3/3]

40. Our due diligence expertise Selection of our wireless infrastructure projects and due diligence assignments [1/2]

41. Our due diligence expertise Selection of our wireless infrastructure projects and due diligence assignments [2/2]

42. Our due diligence expertise Selection of due diligences of major fixed, integrated, backbone and broadband operators [1/2]

43. Our due diligence expertise Selection of due diligences of major fixed, integrated, backbone and broadband operators [2/2]

44. Amrish Kacker amrish.kacker@analysysmason.com Lim Chuan Wei lim.chuan.wei@analysysmason.com Analysys Mason Pte Ltd 8 Temasek Boulevard Penthouse Level Suntec Tower Three Singapore 038988 Tel: +65 6866 3203 Fax: + 65 6866 3838 www.analysysmason.com