Nextivity Overview Dec 2008 Summary

Nextivity, Inc. Confidential & Proprietary

December 2008


IntroductionIntroduction

2

• Poor indoor coverage remains the major pain point for Wireless Operators, representing a €17B+ market opportunity for 3G alone

• Nextivity’s patented Cel-Fi product holds the key


P/E multiples peaked over promise of P/E multiples peaked over promise of 3G3G

3

Expectation was that 3G would enable voice, data and video revenues – a triple-play that could be served while mobile or in the home

P/E

Mul

tiple

(x)

Wireless Operators* Forward P/EPS, 1998-present

Peak of 3G auctions

*Vodafone, Telefonica, NTTDoCoMo, France Telecom, Deutsche TelekomSource: First Call

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Reality sets in that 3G will disappoint


3G promise thwarted by physics…3G promise thwarted by physics…

4

Most 3G networks were launched on higher frequencies that have difficulty traveling through building walls where subscribers are located, making it challenging to deploy pervasive voice and high speed data services

Ironically, the area with the

highest probability of usage (up to 70%), is also the area with

the lowest probability of

coverage


In-home coverage remains industry’s top pain In-home coverage remains industry’s top pain point point

5

35-45% of customers have poor in-home coverage(using 3G, GSM, or CDMA)

Expensive, sizeable problem for industry

However industry lacks solutions

“There is not an operator in the world that does

not need an in-building solution…”

“We have a huge pain point with customer

churn due to poor indoor coverage and until now

have had no tools to save these customers”

What happens to customers with poor indoor coverage?

• Put up with it unhappily• Get a 2ndline (work/home)• Churn & don’t tell you why• Churn & tell you why

How expensive is churn?• Churn is >2%/month,

of which 17%+ churn explicitly due to indoor coverage

• Cost of customer acquisition is €300+

• ARPU is €50-90/month• Customer lifetime value

is €2,200+

Source: Nextivity interviews with carriers, Nextivity estimates

Frustrated 71M W-CDMA subs with poor indoor coverage

create a TAM of €17B

45%Tier 1 operator

35%Tier 1 operator

36%Signals

Research(based on mathematical

estimates)


Network quality still remains the axis of Network quality still remains the axis of competitioncompetition

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Would switch operators to get better in-home coverage

Would switch service providers to have fast at-home mobile internet

Would only use their mobile service if home coverage was good

Would purchase additional equipment if they could make free phone calls inside their home

Source: Quality Resource Associates, 2006 (research sponsored by Alcatel-Lucent)

Network quality is the key driver of customer satisfaction, churn &upsell


High Speed Data Cards a bright High Speed Data Cards a bright spot….spot….

7

Integrated HSPA modem

3G data card

Source: ABI Research, Ericsson

High Speed Data Card ShipmentsMillions of units, projected

By 2011, we are on track to have 100M+ laptops (50% of total laptops manufactured) with integrated HSPA modems

195

143

104

82

57

2009 2010 20122011

+36%CAGR

2013


However, in-home data rates have been However, in-home data rates have been an embarrassment & present a major an embarrassment & present a major challengechallenge

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Operators have had to credit 3G subscribers because their dongles (i.e., USB-based mobile broadband devices) have been so slow or didn’t work at home


Nextivity’s ‘Cel-Fi’ solves the physics Nextivity’s ‘Cel-Fi’ solves the physics problem that has hobbled wireless from its problem that has hobbled wireless from its inceptioninception

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Cel-Fi is the world’s first 100% digital, operator-grade, mass-deployable ‘Smart Repeater’ that removes the effects of in home path loss while capturing and regenerating a stronger signal, enabling pervasive voice and high speed data throughout the home

Cel-FiWindow unit

Coverage unit

Cel-Fi removes the adverse effects of outer & inner walls


Cel-Fi is customer installable & self-configuringCel-Fi is customer installable & self-configuringCel-Fi is the first mass deployable solution thanks to its extraordinary ease of Cel-Fi is the first mass deployable solution thanks to its extraordinary ease of useuse

10Note: To watch this demo, please view it in PPT Slide Show mode. Or, it is also viewable at: http://www.nextivityinc.com/consumers/images/demo_h.swf


Operators extremely excited about Operators extremely excited about NextivityNextivity

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“Right now our usual answer to a residential customer is no, I can’t provide you a repeater; but

this product means we can say yes”

“The existence of the enterprise product is very helpful, it would be very much easier to implement

than what we do today”

“This product should go hand in hand with the USB dongle modem to create a replacement for wireline

broadband in the home”

“We are just starting to cover the rural areas with 3G and it is not easy. This product has a future with us”

Major applications

Churn mitigation & customer save programs

Fixed line replacement for voice and high speed data

Providing broadband where no wireline broadband service exists

Enterprise applications

Operators see a wide range of revenue generating and cost saving opportunities


30+ operators are piloting Cel-Fi products 30+ operators are piloting Cel-Fi products globallyglobally

12

As a key vendor in partnership with Three Hutchison, Nextivity has received its first volume commitment worth €24M+ (minimum €12M)

Non-EU pilot commitments have also just begun…

Hong Kong, Australia and Russia have already committed


Product summary: Simply RevolutionaryProduct summary: Simply Revolutionary

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Proven team Proven team Has shipped millions of wireless units to top tier customers Has shipped millions of wireless units to top tier customers in the pastin the past

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• Experienced wireless CEO• GM of Broadcom’s Broadband cellular products group; • CEO/Chairman of Zyray Wireless (acquired by

Broadcom)• CEO of Centera LTD

Werner Sievers , CEOWerner Sievers , CEO

• 12 years of experience in wireless• Senior Director at Broadcom responsible for platform

development in the Mobile Communications BU• Co-Founder of Zyray Wireless• Holds several patents and has published 30+ journal

articles

MichielLotter, VP of EngineeringMichielLotter, VP of Engineering

• 15 years as a prolific systems engineer/inventor in wireless for Texas Instruments, Morpho, Motorola & Fujitsu

• Broad experience with cellular systems (GSM, DECT, WCDMA, IS-95, cdma2000 and TDS-CDMA, and other systems such as GPS and wireless LANs (WiFi&WiMax)

BehzadMohebbi, Founder & CTOBehzadMohebbi, Founder & CTO

• 20 years of experience in wireless / semiconductors• Financial management roles at DEC, Intel, Kyocera

Wireless & Qualcomm• Operational experience from GE & Advanced Marketing

Services

Tony Pun, Director of FinanceTony Pun, Director of Finance

• 22 years in Sales & Business Development• Sales Director EMEA for IPWireless responsible for

Mobile Network Operators & RAN Infrastructure partners across Europe

• Sales experience with for several companies pioneering 3G Backhaul, RAN Optimization and Active DAS solutions

Andrew Gruar, VP Sales & Business Mgm’t, EMEAAndrew Gruar, VP Sales & Business Mgm’t, EMEA

• 22 years of telecom experience at T-Mobile, Cingular, Sprint, BCP, US Cellular, Optus, BellSouth

• Global carrier experience spanning N. America, Latin America (Brazil, Venezuela, Chile), Europe (UK, Denmark) and Australia

• Holds multiple patents and author of 2 books on mobile communications

George Lamb, Dir. of Marketing & Carrier OpsGeorge Lamb, Dir. of Marketing & Carrier Ops • 35 years in the wireless industry at Motorola, RF Communications, Qualcomm, Kyocera, and Elocteq

• Has managed global communications equipment production in the US, China and Mexico

• Holds 3 systems and circuit design patents

David Ramsland, VP of OperationsDavid Ramsland, VP of Operations


Nextivity summaryNextivity summary

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Top tier investors$17M invested to date

Patented breakthrough technology Ideal team

Team has worked together at Broadcom & Zyray. Collectively the core engineering team has shipped millions of units to top customers including Samsung & Panasonic

• Greenfield, patented IP from silicon to systems provides an extremely defensible position. IP dates to 2003

• Intelliboost processor is the core to a series of product families that seek out the best available signal & adjusts to maximize coverage within buildings

• Intelliboost technology enables operators to address major industry pain points & goals: reducing churn, enabling broadband wireless, and enabling fixed to mobile conversion

Nextivity, Inc. Confidential & Proprietary 16

KCP CapitalKamal Tayara, Managing Partner

[email protected]+971 (50) 559 8114

www.kcpcapital.com

NextivityWerner Sievers, CEO

[email protected]+1 (858) 485 9442 x203

www.nextivityinc.com

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