McIntire Investment InstituteAt the University of Virginia

Long Pitch:

Syniverse Technologies

(NYSE:SVR)

M c I n t i r e I n v e s t m e n t I n s t i t u t e1

(NYSE:SVR)

Prepared by Hideyuki Liu, CFO | Jan 27, 2010

Presentation Outline

• Business and Stock Overview

• Thesis Points

• Misperception

• Value Added Research (VAR)

M c I n t i r e I n v e s t m e n t I n s t i t u t e2

• Value Added Research (VAR)

• How It Plays Out

• Risks

Business and Stock Overview

• Syniverse Technologies (SVR) provides wireless voice and data services for telecommunications companies worldwide

• Serves more than 800 communications companies in over 160 countries

• Its integrated suite of services include technology

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• Its integrated suite of services include technology interoperability services, which enable the invoicing and settlement of domestic and international wireless roaming telephone calls and wireless data events

• Syniverse was founded in 1987 and is headquartered in Tampa, Florida.

Business and Stock Overview

Share Price (Jan 26): 17.40 52-week Range: 12.03 – 19.56

Market Capitalization: 1.2B % of 52-week high: 89%

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P/E: 17.69 Total Cash: 216MM

EPS: 0.98 Total Debt: 655MM

Business and Stock Overview

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Thesis Points

• Company Fundamentals

– Reliable business model

– Strong historical performance

– Clean balance sheet

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– Clean balance sheet

• Growth Potential

– Growing demand in emerging markets

– Continuously changing technology standards

– Acquisitions

Company Fundamentals

• Leading provider of roaming enablement, signaling,

and interoperability solutions to the wireless industry

– SVR allows wireless operators to deliver services to subscribers including roaming, SMS, MMS, MDR, caller ID, number portability, and wireless value-added video

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ID, number portability, and wireless value-added video services

• Long-term contracts

– Most of SVR’s revenues are transaction-based charges under long-term contracts, typically with terms averaging three years in duration

Company Fundamentals

• Strong historical performance

– During the course of over two decades, SVR has continued to demonstrate an ability to adapt with ever-changing telecommunications technology with a contract renewal rate of 98%

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contract renewal rate of 98%

• Solid balance sheet

– At a time when many firms are struggling with a fragile balance sheet, SVR holds 335MM in current assets (217MM in Cash) against total liabilities of 655MM

of which 50MM are current liabilities

Growth Potential

• Clearinghouse services like SVR translate various network signaling and billing protocols to allow different wireless operators to offer and be compensated for roaming

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and be compensated for roaming services

– Demand for clearinghouse services is primarily driven by the number of domestic and

international wireless roaming

subscribers

Growth Potential

200

250

300

US Wireless Subscribers (in millions)

1200

1400

1600

US Yearly SMS Messages(in billions)

M c I n t i r e I n v e s t m e n t I n s t i t u t e10

0

50

100

150

200

2000 2005 2009

Wireless Subscribers

0

200

400

600

800

1000

2000 2005 2009

Yearly SMS Messages

Source: CTIA – The Wireless Association

Growth Potential

• The US wireless industry has grown from an estimated total subscriber base of 97.0 million in 2000 to 262.7 million by mid-year 2008, a 171% increase

• This explosive level of growth can be extrapolated globally

– In fact, Syniverse saw 74% revenue growth in 2008

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– In fact, Syniverse saw 74% revenue growth in 2008 from customers outside of North America

– In 2004, revenues from outside North America were at 8%; in 2008, approximately 28% of Syniverse net revenue came from customers located outside of

North America

Growth Potential

3000MM

Total Worldwide Subscribers

42% Rise

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2006 2011

566MM

Total Global Roaming Subscribers

87% Rise

Source: Informa, industry research firm

Growth Potential

2.6

Worldwide SMS Traffic

5.5 Trillion

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2.6

Trillion

(2007)

5.5 Trillion

(2013)

Compound Annual Growth Rate of 13%

Source: Portio Research

Growth Potential

51.4

Worldwide MMS Traffic

171.7

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51.4

Billion

(2007)

Compound Annual Growth Rate of 22%

Source: Portio Research

171.7

Billion

(2013)

Growth Potential

• Ever-changing technology

– The emergence of next-generation wireless communication

services such as WiMAX, LTE and VoIP, future government

mandated changes, and new applications for existing

communications services will drive future industry growth

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communications services will drive future industry growth

Skype’s on-net international

traffic (between Skype users)

grew 51 percent in 2008, and is

projected to grow 63 percent

in 2009, to 54 billion minutes

Growth Potential

Thanks to its strong balance sheet, Syniverse is able to

expand its businesses globally

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ITHL

Acquired VeriSign’s

Messaging business

for 175MM in Cash

(2009)

Acquired BSG;

expansion into Europe,

Asia, and Middle East

for 290MM in Cash

(2007)

Acquired ITHL;

expansion into Asia-

Pacific for 45MM in

Cash

(2006)

Misperception

• Syniverse’s niche in the market will be displaced as wireless companies consolidate and/or look for in-house solutions

– Evidence: Verizon-Alltel merger; Alltel/Spring Insourcing initiative

– Why it’s wrong: Verizon still renewed its contract at the

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– Why it’s wrong: Verizon still renewed its contract at the end of 2009; Increase in global demand will more than offset negative pressures

Misperception

• Syniverse will not realize the global demand due to macro forces and/or greater competition

– Evidence: Experienced lower sales due to reduced capital spending by operators in Asia-Pacific related to economic downturn and increased competition by major

M c I n t i r e I n v e s t m e n t I n s t i t u t e18

economic downturn and increased competition by major equipment manufacturers (e.g. Ericsson, Nokia, Siemens) and local system integrators

– Why it’s wrong: In mid-November, Syniverse achieved its 100th mobile operator customer and strengthened its position in the region with the acquisition of VeriSign’s Messaging and Mobile Media Services

Value Added Research (VAR)

• Anonymous lawyer for US Telecommunications Company

– Talked about trademark and copyright issues on the global level.

– TAKEAWAY: Even from a legal standpoint, there are significant barriers to entry for one company to dominate the entire globe

• Randall Rager, Verizon sales engineer

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• Randall Rager, Verizon sales engineer

– Talked about Verizon’s trends with regards to in-sourcing and out-sourcing

– TAKEAWAY: It’s simply an exercise in cost-benefit analysis. Bottom line: If Syniverse can provide its services cheaper than Verizon can for itself, Syniverse will have its business

Value Added Research (VAR)

• Tom Brooks, Deloitte Technology Consultant

– Has over 30 years in the telecom industry and gave historical insight that may be extrapolated for the future

– TAKEAWAY: The US will not be dominated by a single wireless carrier, if only to prevent antitrust

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• Betsy Chapman, Telephia-Nielsen Mobile

– Discussed the market’s tendency to move towards consolidation

– TAKEAWAY: Yes, wireless companies are consolidating. However, new technology like WiMAX and VoIP are bringing new competitors like Clearwire. Also, the growth of iPhones and other smartphones is bringing other new companies into the market

How It Plays Out

• Syniverse will continue to expand its business on a global scale

through acquiring new contracts and acquiring new

companies and position itself as the intermediary to all

• Explosive growth of wireless technology in developing countries

such as those in Africa, Asia, and South America shows no sign

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such as those in Africa, Asia, and South America shows no sign

of slowing down

• In developed countries, smartphones will proliferate, resulting

in new types of value-added services such as watching TV on

your phone (already occurring in Japan)

• Syniverse reaps immense profits from this exponential increase

in transaction volume and transaction types

Risks

• The absolute worst case scenario for Syniverse would be if the

world ends up with a single wireless carrier that consolidates all

available technologies under one roof

• Even if this does not happen, rampant consolidation and/or in-

sourcing on a global level will greatly hinder Syniverse’s role in

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sourcing on a global level will greatly hinder Syniverse’s role in

the market

• Possibility of an unexpected drop-off in demand for

smartphones and/or wireless services in developing countries

Summary and Recommendation

Summary

SVR has a strong business model that has proved time and

time again. The nature of its contracts also promises a steady

inflow of cash. Furthermore, thanks to its global positioning,

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inflow of cash. Furthermore, thanks to its global positioning,

SVR is in the best possible position to capitalize on the global

expansion of communications technology.

Recommendation

MII should execute a buy-in with 5% of its capital.

McIntire Investment InstituteAt the University of Virginia

Long Pitch:

Syniverse Technologies

(NYSE:SVR)

M c I n t i r e I n v e s t m e n t I n s t i t u t e24

(NYSE:SVR)

Prepared by Hideyuki Liu, CFO | Jan 27, 2010