The information contained in this presentation is for information purposes only and does not constitute an offer or invitation to sell or the solicitation of an offer or invitation to purchase or subscribe for any convertible bonds (the “Convertible Bonds”) or rights (the “Rights”) to purchase Convertible Bonds to be offered by euNetworks Group Limited (the “Company”) or shares in the Company (the “Shares”), in Singapore, the United States or any other jurisdiction. It should not, nor should anything contained in it, form the basis of, or be relied upon in any connection with any contract or commitment whatsoever.
An offer information statement (the “OIS”) in relation to the renounceable partially underwritten rights issue (the “Rights Issue”) of zero coupon Convertible Bonds has been lodged with the Singapore Exchange Securities Trading Limited as agent for the Monetary Authority of Singapore and will be despatched to entitled shareholders of the Company and purchasers of the provisional allotments of Convertible Bonds (the “Rights”) eligible to participate in the Rights Issue in due course. Any decision to subscribe for Convertible Bonds or purchase Rights should be made solely on the basis of information contained in the OIS and no reliance should be placed on any information other than that contained in the OIS.
This presentation may contain forward-looking statements that involve risks and uncertainties. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements as a result of a number of risks, uncertainties and assumptions. Although the Company believes that such forward-looking statements are based on reasonable assumptions, it can give no assurance that such expectations will be met.Representative examples of these factors include (without limitation) general industry and economic conditions, interest rate trends, cost of capital and capital availability, shifts in customer demands, customers and partners, changes in operating expenses, including employee wages, benefits and training, governmental and public policy changes and the continued availability of financing in the amounts and the terms necessary to support future business. You are cautioned not to place undue reliance on these forward looking statements, which are based on current view of the management on future events.
This presentation has been prepared by the Company. The information in this presentation has not been independently verified. No representation, warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions in this presentation. None of the Company or any of its agents or advisers, or any of their respective affiliates, advisers or representatives, undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise and none of them shall have any liability (in negligence or otherwise) for any loss howsoever arising from any use of this presentation or its contents or otherwise arising in connection with this presentation.
This presentation may not be distributed in the United States. The Rights, Convertible Bonds and Shares may not be offered or sold in the United States absent registration or an exemption from registration under the U.S. Securities Act of 1933 (the “Securities act”) as amended. Neither the Company nor any seller of securities intends to register any portion of any offering in the United States or to conduct a public offering of securities in the United States.
This presentation must not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other person, whether or not such person is a relevant person.
It is recommend that the recipient seek independent third party legal, regulatory, accounting and tax advice as appropriate with regards to the contents of this presentation. This presentation does not constitute and should not be considered as any form of financial opinion or recommendation.
Disclaimer
March 2010 Copyright euNetworks 2010 Page 1
2009 Summary
• euNetworks is a facilities based provider of ethernet and IP services to both wholesale and enterprise customers.
• We operate in a sub segment of the telecommunications industry defined as Bandwidth Infrastructure.
• This segment is characterised by:
• Horizontally integrated business strategies;
• High barriers to entry;
• Unique assets;
• Rapidly growing demand and predictable recurring revenues;
• Significant capital to operate at scale leading to high operating leverage (yielding high gross margins & EBITDA margins) generating high free cash flow.
March 2010 Copyright euNetworks 2010 Page 2
• euNetworks is early in its development.
• Our strengths lie in our deep European metro networks and experienced leadership team.
• Our challenge is to begin to generate revenues across our footprint at the right financial return.
• Central to this is the need to develop our networks and put more buildings on our network.
• Our goal is to add more than 1,000 buildings over the next five years.
• The main purpose of this fundraising is to:
• Repay our existing 2012 bonds.
• Fund capital expenditure.
• Working Capital.
Agenda
1 Bandwidth Infrastructure
2 Our Network
3 Strategy
4 Management & Financials
March 2010 Copyright euNetworks 2010 Page 3
Where does euNetworks fit in the telecom industry?
Telephony, Broadband, Application Management, Transactions, Storage
End UserServices
Voice, Data, Mobile, Video, CDN, HostingEnterprise/Telco
Services
Colocation, Cell Towers, Duct, Fibre, Network Equipment
BandwidthInfrastructure
Public Rights of Way, Spectrum,Utilities, Property Owners
Enablers of Infrastructure
March 2010 Copyright euNetworks 2010 Page 4
Where does euNetworks fit in the telecom industry?
• Horizontally integrated
• High barriers to entry
• Rapidly growing demand
• Predictable recurring revenues
• Significant capital to operate at scale
• Unique assets
• High free cash flow at scale
• Primarily 3-5 year recurring revenue contracts
• High operating leverage
Bandwidth Infrastructure has similar
characteristics to the Colocation segment
March 2010 Copyright euNetworks 2010 Page 5
Bandwidth Infrastructure is a critical enabler of business
Amsterdam Metro Fibre
Frankfurt Metro Fibre
Bank Head Office
Enterprise Data Centre
Multi Tenant Building
Pan-EU Longhaul Fibre
Financial Exchange Data Centre Multi Tenant Building
London Metro Fibre
Bank Head Office
Financial Exchange
Carrier Hotel
Cell Tower
Cable Head end
Broadcast Playout Centre
March 2010 Copyright euNetworks 2010 Page 6
240,000
212,000
185,500
159,000
132,500
106,000
79,500
53,000
26,500
0
Source: Juniper, Cisco, MIN from “Do The Economics Of Bandwidth Scale?” Presentation by Juniper Networkshttp://www.slideshare.net/kvjs/do-the-economics-of-bandwidth-scale-juniper-presentationTS
1990 1993 1996 1999 2002 2005 2008 2011 2014 20202017
+36%Video
+24%Non-video
Plus Machine to Machine?
+32%2008-2020
CAGR
www is born
Digital decade
27xGrowth
2008-2020
Why the Bandwidth Infrastructure model is attractiveDemand growing exponentially
Worldwide internet traffic, 1990-2020 [PB/month]
March 2010 Copyright euNetworks 2010 Page 7
Why the Bandwidth Infrastructure model is attractive
High Data Needs and Capacity ConstraintsInternet Use (GB per Avg. sub per month)
Ethernet/WDM Anticipated to Grow ~ 30%Global Ethernet Infrastructure Revenues ($ in billions)
Source: Cisco Visual Networking Index: Usage Study; euNetworks Internal Analysis http://www.cisco.com/en/US/solutions/collateral/ns341/ns525/ns537/ns705/Cisco_VNI_Usage_WP.html
Source: Arc Advisory Group; euNetworks Internal Analysishttp://www.arcweb.com/StudyBrochurePDFs/Study_ethernet-infra.pdf#search=%22ethernet%22
March 2010 Copyright euNetworks 2010 Page 8
1823
37
53
69
82
0
20
40
60
80
100
2008 2009 2010 2011 2012 2013
260
350
450
600
750
950
$0
$200
$400
$600
$800
$1,000
2006 2007 2008 2009 2010 2011
Why the Bandwidth Infrastructure model is attractiveImproved supply and demand balance
• Too many suppliers
• Vertically complicated companies
• Too much capacity “build it and they will come”
• Speculative customers
• Irrational expectations drove & supported bad balance sheets
• Horizontally focused Bandwidth Infrastructure businesses emerging
• Suppliers beginning to consolidate
• Sustainable demand driven by fundamental bandwidth usage
• High barriers to entry
• Indications of pricing stabilisation (on unique assets)
Telecom Meltdown Today
DemandSupply Demand
Supply
Source: Zayo Group; Kaufman Brothers
March 2010 Copyright euNetworks 2010 Page 9
Competitive financial baseline dataA fast growing and highly profitable sub-segment of telecom companies
Source: Kaufman Bros., Company Earnings Reports
AboveNet
AFS
Cogent
FiberTech
FPL Fibernet
Lightower
15%
20%
11%
20%
15%
15%
42%
38%
29%
50%
40%
35%
47%
43%
34%
55%
45%
40%
RCN Metro
TWTC
Zayo Group
10%
13%
12%
33%
31%
35%
38%
34%
40%
Average 15% 37% 42%
CompanyEBITDA Margin
Low High3 yr. Rev. CAGR
March 2010 Copyright euNetworks 2010 Page 10
Competitive financial baseline data
EBITDA Margin Trends – Competitive Telecoms Competitive Telecom: Capex as % of Revenue Trends
• Capital intensity can be a function of stage of development of company, ease of raising capital or availability of expansion opportunities; however, capital intensity can also be driven by the proportion of services that a carrier can place upon it’s own network.
• Facilities-based metro carriers in the U.S. have successfully leveraged their network assets in the ground to drive high margin business via capital investment.
• euNetworks strategy is to invest a high percentage of revenue into the network as CapEx – a proven operational model that delivers strong returns.
ABVT
TWTC
RCN Metro
CCOI
LVLT
Sprint Wireline
ITCD
CBeyond
PAET
GLBC
XOHO
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
Sprint Wireline
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Q1/08 Q2/08 Q3/08 Q4/08 Q1/09 Q2/09 Q3/09
ABVT
TWTC
RCN Metro
Cogent
LVLT
ITCD
CBeyond
PAET
GLBC
XOHO
Source: Telecom Ramblingshttp://www.telecomramblings.com/2009/11/ebitda-margin-trends-for-competitive-fiber-networks-112009/http://www.telecomramblings.com/2009/11/capex-trends-amongst-competitive-telecoms/
March 2010 Copyright euNetworks 2010 Page 11
Agenda
1 Bandwidth Infrastructure
2 Our Network
3 Strategy
4 Management & Financials
March 2010 Copyright euNetworks 2010 Page 12
euNetworks has fibre networks in 15 metro markets but only generates measurable revenue from 4 cities
Hanover
Dublin
London
Amsterdam
Frankfurt
Hamburg
Berlin
Stuttgart
Düsseldorf
UtrechtRotterdam
The Hague
Munich
Cologne
Paris
• A unique inventory of fibre and duct assets tailored to fulfill the high bandwidth needs of enterprises and carriers
• 4 key markets today
• Upside with growth potential in 9 markets
March 2010 Copyright euNetworks 2010 Page 13
Our networks are in the right places
Amsterdam Metro Frankfurt MetroDublin Metro
London Metro
March 2010 Copyright euNetworks 2010 Page 14
Less than 10% of fibre in use*
The network delivers growth potential
*Average utilisation across Metro networks
Up to 6 ducts within each city
Only 1 duct used with 432 fibres
March 2010 Copyright euNetworks 2010 Page 15
We need to add buildings to the network to unlock its potential
Totals 245 1,830
Market4Q09
On-Net Buildings
5 Year IndicativeOn-Net Buildings
Dublin
London
Amsterdam
Rotterdam
The Hague
Utrecht
34
16
42
4
0
10
100
300
200
70
0
60
Berlin
Cologne
Dusseldorf
9
9
19
100
60
100
Frankfurt
Hamburg
Hanover
Munich
Stuttgart
Paris
83
10
0
2
5
2
250
120
0
120
100
250
March 2010 Copyright euNetworks 2010 Page 16
Agenda
1 Bandwidth Infrastructure
2 Our Network
3 Strategy
4 Management & Financials
March 2010 Copyright euNetworks 2010 Page 17
Our strategy
March 2010 Copyright euNetworks 2010 Page 18
Built on scalable operating platforms
Invest in network development tomaximise Return on Invested
Capital
Add traffic intensive buildingsOffer the right products at the right price with an outstanding customer
service to generate high revenue growth
Focus for growth
• Geography
• Generate revenue across our footprint
• Add target buildings
• Products
• IP and Ethernet
• Wavelengths
• Dark Fibre
• Customers
• Wholesale
• Carrier, ISP, Cable, Mobile, etc.
• Enterprise
• Large bandwidth consuming companies on or near our fibre.
• Financial Services, Media, Healthcare, Legal, Manufacturing, etc.
Geography
Products
Customers
March 2010 Copyright euNetworks 2010 Page 20
Agenda
1 Bandwidth Infrastructure
2 Our Network
3 Strategy
4 Management & Financials
March 2010 Copyright euNetworks 2010 Page 21
euNetworks Management Team
Noel MeaneyExecutive Chairman
Brady RafuseChief Executive Officer
James BrodieChief Financial Officer
Uwe NicklChief Marketing Officer
Richard TaylorGeneral Counsel
Claire LeakeVice President Human Resources
March 2010 Copyright euNetworks 2010 Page 22
Financial summary
Listing Singapore Exchange Catalist
Ticker Symbol
Bloomberg EUN:SP
Reuters EUNG.SI
SGX H23.SI
Shares Outstanding 8,645 million
Market Capitalisation~ S$130 million
[based on S$0.015 per share]
52-Wk Hi/Lo S$0.045 / S$0.010
March 2010 Copyright euNetworks 2010 Page 23
FY06 FY07 FY08 FY09
• Annual recurring revenues have grown significantly to FY09, reflecting a Compound Annual Growth Rate (CAGR) of 39% since FY06.
• In addition we won 74 new customers during FY09 (79 in FY08).
Long-Term Recurring Revenue Growth (€m)
30
5
10
15
20
0
10.8
16.3
23.5
29.3
Historic revenue growth
25
March 2010 Copyright euNetworks 2010 Page 24
FY09 Financial highlights
Financial Year-end: 31 December
(€ ‘000) FY2009 FY2008
Revenue 30,149 23,921
EBITDA (4,212) (6,038)
Exceptional Gain and/or Non operating Income 8,320 1,948
Loss before tax (10,269) (18,865)
Loss after tax (9,857) (18,210)
PPE 155,217 156,082
Current assets 16,207 16,453
Total liabilities 42,406 82,025
March 2010 Copyright euNetworks 2010 Page 25
Partially underwritten Rights Issue
• Convertible Bonds.
• 1 zero coupon Convertible Bond for
every 100 shares held issued at 3% discount.
• Issue price of S$0.97 for each Convertible Bond.
• Initial conversion price S$0.02 per Convertible
Bond.
• Term – 3 years.
• Semi-annual conversion price resets.
• Rationale and use of proceeds:
1. Fund the repayment of the 2012 Bonds
2. Fund the capital expenditure requirements of the
company, with the balance for working capital.
• Strong support from substantial shareholders.
6 month
1 year
1 year 6 month
2 year
2 year 6 month
3 years (Maturity Date)
0.019231
0.018491
0.017780
0.017096
0.016439
0.015806
Anniversary of date of issue
Conversion Price (S$)
March 2010 Copyright euNetworks 2010 Page 26
Summary
Strong market growth driven by demand for bandwidth
High barriers to entry
Attractive business model with long term recurring revenues
Unique assets that offer high operating leverage
Management’s proven ability to execute and deliver value
1
2
3
4
5
March 2010 Copyright euNetworks 2010 Page 27