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DISCLOSURE APPENDIX CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, INFORMATION ON TRADE ALERTS, ANALYST MODEL PORTFOLIOS AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION®

Client-Driven Solutions, Insights, and Access

04 December 2013

Americas/United States

Equity Research

Telecommunications Equipment

CommScope (COMM) INITIATION

Leveraged to a Wireless CapEx Upswing

■ Initiate at Outperform: We believe CommScope is well positioned to benefit from the improving wireless carrier spending environment as well as the rapid rollout of LTE. Given the company's solid positioning, scope for operating leverage, and balance sheet deleveraging, we believe the shares

will outperform, and we initiate with a target price of $20.

■ A Leader in an Improving Market: The wireless business (~62% of sales) is a market leader in the area of base station antennas, amplifiers, filters, cables, and physical layer equipment that go into a base station. We believe this is leveraged to an improving wireless infrastructure spending environment that is set to see a multi-year cyclical upturn, driven by a rapid period of LTE deployment. We see a healthy CapEx environment developing, with continued robust spending in Japan and North America, given strong data growth. Additionally, with Europe coming out of a recession, triggering Vodafone's intentions to spend, and recent auctions pushing up spending in

Brazil, CapEx spending could see even further upside.

■ Deleveraging the Balance Sheet and driving Operating leverage: While we assume LT OMs at 18%, this could be conservative, given the company's scrutiny on its cost base and upside potential for revenue growth. Additionally, we believe IPO proceeds and FCF of 872mn in 2013-15 will be used to pay down debt, driving the long-term leverage ratio to ~2.2x.

■ At a Wide Discount to the Peer Group: We adjust our EBITDA estimate. Trading at 8x, we believe that CommScope trades at a 21% discount to peers on an EV/EBITDA basis. Given higher profitability and better unlevered FCF due to a solid end-market position, this magnitude of a discount appears unjustified. Based on our EV/EBITDA, DCF, and HOLT

®

analyses, we believe there is 20% upside potential to $20.

Share price performance

14

15

16

17

18

Oct-13

Daily Oct 25, 2013 - Dec 02, 2013, 10/25/13 = US$14.99

Price Indexed S&P 500 INDEX

On 12/02/13 the S&P 500 INDEX closed at 1808.37

Quarterly EPS Q1 Q2 Q3 Q4 2011A 0.26 0.23 0.25 0.10 2012A 0.15 0.30 0.43 0.32 2013E 0.35 0.60 0.38 0.28

Financial and valuation metrics

Year 12/11A 12/12A 12/13E 12/14E EPS - (Excl. ESO) (US$) 0.84 1.20 1.59 1.66 EPS (CS adj.) (US$) 0.84 1.20 1.61 1.66 Prev. EPS (CS adj.) (US$) — — — — P/E (CS adj., x) 19.8 14.0 10.4 10.1 P/E rel. (CS adj., %) — 80.9 63.5 68.2 Revenue (US$ m) 3,275.5 3,321.9 3,453.6 3,532.9 EBITDA (US$ m) 462.6 570.6 669.7 683.5 Net debt (US$ m) 2,246 2,206 2,199 1,900 OCFPS (US$) 0.85 1.85 1.41 1.82 P/OCF (x) — — 11.8 9.2

Number of shares (m) 185.70 Price/sales(x) 0.79 BV/share (Next Qtr., US$) — P/BVPS (x) 37.3 Net debt (Next Qtr., US$ m) 2,199.3 Dividend (current, US$) — Dividend yield (%) —

Source: Company data, Credit Suisse estimates.

Rating OUTPERFORM* Price (02 Dec 13, US$) 16.74 Target price (US$) 20.00¹ 52-week price range 16.74 - 14.85 Market cap. (US$ m) 3,108.68

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

[V] = Stock considered volatile (see Disclosure Appendix).

Research Analysts

Kulbinder Garcha

212 325 4795

[email protected]

Talal Khan, CFA

212 325 8603

[email protected]

Achal Sultania

44 20 7883 6884

[email protected]

Andrew Ruben

212 325 4798

[email protected]

Matthew Cabral

212 538 6260

[email protected]

Ray Bao

212 325 1227

[email protected]

04 December 2013

CommScope (COMM) 2

Executive Summary We initiate coverage of CommScope with an Outperform rating and a target price of $20.

We believe that the company is directly leveraged to the improving wireless spending

environment over the next few years. This is driven by a growth in smartphones, tablets,

and M2M communication devices; datacenter and cloud based services; and LTE rollouts.

Our Outperform rating is based on five key factors.

Solid Supplier of All Players in the Wireless Infrastructure End Markets:

CommScope's wireless segment provides antennas, amplifiers, filters, cables and physical

layer equipment for base stations, as well as microwave antennas and enclosures for base

stations for wireless infrastructure. This enables wireless operators to deploy macro cell

sites and small cell DAS solutions to meet 2G, 3G, and 4G cellular coverage and capacity

requirements. The company provides everything that makes the base station work outside

of the cellular technology that Ericsson, NSN, Huawei and Alcatel-Lucent typically supply.

While market share is hard to track, we estimate that the company is a leading player and

has the number one share for RF wireless network connectivity solutions.

An Improving End Market: Specifically for the wireless infrastructure market, we see

potential for a multi-year upturn in spending, driven by a confluence of factors.

Region by Region the Spending Outlook Is Improving: Looking at indications from carriers,

we believe that wireless CapEx spend may only grow about 2% next year, with potential

upside for 2014 guidance. We see continued strength in CapEx spend at U.S. and

Japanese carriers, an expected pick-up in spending in Korea following the recent

spectrum auction, and LTE deployments beginning in Brazil. Within Western Europe, we

see Vodafone's Project Spring potentially reaccelerating the market, especially in the

context of the sizeable underinvestment in recent years. Vodafone aims to spend an

incremental £6bn over the next three years, with 65-75% of the investment dedicated

toward improving network quality. This has the potential to drive further CapEx upgrades

from other major operators in Europe, similar to what occurred in the U.S. starting in late

2011.

LTE Coverage Specifically Is Picking Up: Today, we estimate that GSM coverage is over

85%, with WCDMA at about 55% of the population and LTE at about 10%. Given the rising

level of smartphone, tablet, and connected device growth, as well as the increasing

amount of traffic per device, we believe the acceleration of LTE coverage could be far

more rapid than the rollout of WCDMA. This accelerated rollout is further driven by greater

device availability than when WCDMA was initially deployed.

Exhibit 1: CommScope Summary P&L—FY13E/FY14E EPS of $1.61/$1.66 in millions, unless otherwise stated.

2011 2012 2013E 2014E

Revenues 3,275.5 3,321.9 3,453.6 3,532.9

Y/Y % change 37.5% 1.4% 4.0% 2.3%

Gross Profit 830.4 1,060.7 1,193.9 1,221.4

Gross Margin 25.4% 31.9% 34.6% 34.6%

Operating Income 379.9 501.1 614.1 629.3

Operating Margin 11.6% 15.1% 17.8% 17.8%

Net Income 130.7 185.3 258.8 303.4

Diluted Share Count 155 155 163 183

Non-GAAP EPS 0.84 1.20 1.61 1.66


04 December 2013

CommScope (COMM) 3

Scope for Continued Leverage on Margins: CommScope has seen EBITDA margins

expand from 14% to 19% over the past three years. Going forward, while we currently

estimate margins of ~20%, we believe that there may be upside to this level due to an

ongoing focus on costs and an efficient supply chain.

CommScope's integrated solutions for wireless, enterprise, and broadband networks are

differentiated in the marketplace and provide a competitive advantage. The company has

invested more than $100 million in R&D in each of the last five years. It has also added IP

and innovation through acquisitions, such as Argus, which enhanced next-generation base

station antenna technology. The ongoing innovation, supported by proprietary IP, has

allowed the company to sustain this competitive advantage.

De-leveraging the Balance Sheet: We estimate that the company can generate over

$300 million of FCF per annum. This is one mechanism by which CommScope will be able

to reduce its leverage. Per the company's guidance, we forecast substantial debt

payments of over $800 million this year (using IPO proceeds) and a further $270 million

and $300 million in 2014 and 2015. Additionally we see scope for improved earnings

growth through the refinancing of its debt, given it currently has $1.5 bn of debt maturing in

2019 which has a coupon of 8.25%. As the company's capital structure improves, there

may be scope for cash distribution in the future.

Exhibit 2: CommScope Will Be Decreasing Its Leverage Following Its IPO US$ in millions, unless otherwise stated.

2,715

2,471 2,399

2,128

1,830

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

-

500

1,000

1,500

2,000

2,500

3,000

LBO 2012 2013 2014 2015

Leve

rage

Rat

iio

Gro

ss D

ebt


Valuation at a Discount to Component Peers: We consider comparable companies for

CommScope, as those with similar attributes to its business (i.e., Amphenol, Anixter, etc.).

We believe that, when compared with these companies, there are two aspects that make

the valuation look appealing. First, the company is relatively speaking much higher in

terms of profitability. We note it has EBITDA margins at ~20%, whereas component peers

average about 12%. Second, on any financial metric, we see the company is trading at a

discount (34% on P/E, 21% EV/EBITDA – Amphenol 13x, Anixter 9x, Comba Telecom 9x-

and 50% on P/FCF on average) across the component companies peer group.(See

Exhibit 27.)

04 December 2013

CommScope (COMM) 4

Wireless—Improving End Market CommScope's core business is wireless, which is 62% of sales and 69% of profit. Our

extensive analysis of the business leads us to conclude that this business segment is set

to see an improving end market, and in turn should drive moderate leverage. Looking

ahead to FY13/14, we expect revenues of $2.1bn/$2.2bn, growth of 12%/2%, with

operating margins of 19.8%/18.8%, respectively, based upon several factors.

Solid Supplier of All Players in the Wireless Infrastructure End Markets: The wireless

segment for CommScope provides base station antennas, amplifiers, filters, cables and

physical layer equipment for base stations, as well microwave antennas and enclosures

for base stations for wireless infrastructure. This enables wireless operators to deploy both

macro cell sites and small cell DAS solutions to meet 2G, 3G, and 4G cellular coverage

and capacity requirements. In essence, the company provides everything that makes the

actual base station work outside of the cellular technology that Ericsson, NSN, Huawei

and Alcatel-Lucent may supply. While market share is hard to track, we estimate that the

company is a leading player and has the number one share for RF wireless network

connectivity solutions.

Exhibit 3: Wireless segment P&L—OMs Expected to Stay Stable at ~19% LT US$ in millions, unless otherwise stated.

1Q13 2Q13 3Q13 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E 2012 2013 2014 2015

Wireless Sales 496 591 553 502 506 597 561 518 1,917 2,143 2,181 2,290

QoQ Growth % -3.8% 19.1% -6.6% -9.1% 0.8% 17.9% -6.1% -7.7%

YoY Growth % 23.4% 27.7% 3.2% -2.7% 1.9% 0.9% 1.4% 3.1% 5.0% 11.8% 1.8% 5.0%

Wireless sales as % of group 61.7% 62.9% 62.2% 61.2% 61.7% 63.0% 61.6% 60.5% 57.7% 62.0% 61.7% 61.7%

Adj. Operating Income 95 127 116 88 88 120 109 93 269 425 411 427

Adj. Operating margin % 19.0% 21.4% 21.0% 17.4% 17.4% 20.1% 19.5% 18.0% 14.0% 19.8% 18.8% 18.6%

Wireless Op. Inc as % of group 71% 85% 79% 59% 60% 80% 74% 63% 35% 49% 47% 47%


An Improving End Market in Spending Terms: Looking at indications from carriers,

while wireless CapEx spend may only grow about 2% next year, we believe there may be

scope to the upside to 2014 guidance. We see this as driven by a number of factors,

including:

■ Accelerating LTE deployments, given population coverage is only 10%, with adoption

we believe being rapid;

■ Carrier competition, as we see carriers such as Sprint keeping the pressure on North

American spend, and Vodafone's investments could change the dynamic in Europe;

and

■ Need for improvements in network quality, given surging data growth.

LTE an Opportunity to Add Value: We note that the continued strain on LTE networks,

as rapid growth of data usage is outpacing infrastructure support in major cities, will

continue to drive demand for network upgrades and additional capacity and coverage

projects. Within this, while CommScope is leveraged to growth across 2G, 3G, and 4G

given its global presence, LTE is a specific area in which we believe CommScope tends to

outperform.

Outgrowing the End Market: We believe this business should grow around 2% in 2014

to $2.2bn and ~6% per year through cycle to about $2.3bn by 2015, as the segment is a

leveraged play on the wireless infrastructure market. CommScope supplies to all the

vendors in the market so it makes them, in aggregate, exposed to a service provider

04 December 2013

CommScope (COMM) 5

spending recovering. Furthermore, the space is now much more consolidated in terms of

vendors than it was ten years ago, effectively reducing the level of competition in the

space.

Key Wireless Products, Broad Portfolio, and

Customers

Antenna Solutions: CommScope's solutions, marketed primarily under the Andrew

brand, enable wireless operators to deploy both macro cell sites and small cell DAS

solutions to meet 2G, 3G, and 4G cellular coverage and capacity requirements.

Macro Cell Site Solutions: These can be found at wireless tower sites and on rooftops

and include base station antennas, microwave antennas, hybrid fiber-feeder and power

cables, coaxial cables, connectors, amplifiers, filters, and backup power solutions

including fuel cells.

Small Cell DAS Solutions: CommScope's DAS solutions primarily comprise distributed

antenna systems that allow wireless operators to increase spectral efficiency. This extends

and enhances cellular coverage and capacity in challenging network conditions such as

commercial buildings, urban areas, stadiums, and transportation systems.

Established Key Customer Relationships: CommScope serves a diverse set of

customers in over 100 countries including all major carriers, infrastructure providers, and

distributors. The company is relevant to the entire wireless infrastructure ecosystem in that

it is approved by all the key infrastructure vendors and supplies to all the key carriers.

Customers include Anixter, Ooredoo, Verizon, Ericsson, Alcatel Lucent, Comcast,

T-Mobile, Huawei, China Mobile, China Unicom, China Telecom, and Softbank. While the

company may be less leveraged to growth in China in the future, we believe the overall

trends in terms of CapEx and LTE deployments may mean there is potential to the upside.

04 D

ec

em

ber 2

013

Co

mm

Sco

pe (C

OM

M)

6

Exhibit 4: CommScope Wireless Advantage

RF Engineering

Expertise

Long tradition of developing highly engineered connectivity solutions, demonstrating superior performance

across various generations of wireless technologies

Continued focus on engineering and innovation has created high quality products and robust pipeline of new

products and innovations

Integrated Cell

Site Solutions for

Every Standard

Complete connectivity solutions supporting 2G, 3G and 4G wireless technologies for both macro cell sites

and Small Cell DAS

Integrated Small Cell DAS solutions that are multi-operator and multi-band

Comprehensive

Product Portfolio

Small Cell DAS

Antennas – Base Station and Microwave

Connectivity Solutions – Fiber and Coaxial

Filter and Amplifiers

Metro Cell Solutions

Enclosures

Relationship with key

carriers globally

Source: Company data, Credit Suisse research.

04 December 2013

CommScope (COMM) 7

Key Drivers—An Inflecting End Market

Demand for Wireless segment products depends primarily on capital spending by wireless

operators to expand their distribution networks or to increase the capacity of their

networks. We believe the following four drivers will continue to provide tailwinds for the

Wireless segment.

Wireless Infrastructure: Ericsson, 4-6% Growth Expected in Core, Radio, and IP

Segments: Ericsson expects the total network equipment market (~50% of Ericsson's

group sales) to grow at a CAGR of 3-5% in 2012-16 (CAGR of 4-6% in key segments like

Radio, IP & Transport, Core) and 5-7% for Services (~45% of group sales). Given

Ericsson is likely to benefit from its installed base of hardware, we expect its 2014/15

Networks sales to grow at 2%/2% yoy, along with 5%/6% yoy growth, respectively, in its

Global Services top-line, driving revenue growth of 4% yoy at the group level over the

period.

LTE Rollout Is the Fastest Ever: In its annual Mobility Report (June 2013), Ericsson

noted that LTE has been deployed at a significantly faster pace than its predecessors

GSM/EDGE and WCDMA/HSPA. Despite being in the relatively early stages of rollout, by

year-end 2012, LTE was estimated to cover 105 of the global population, and looking

ahead six years, it is predicted that LTE will cover approximately 60% of the population

from 10% today. Consistent with this, we see multiple rollouts happening across all major

regions for LTE beginning in 2013 and beyond. (See Exhibit 5.)

Exhibit 5: LTE Coverage Expected to Expand to 60% in the Long Term

>85%

>55%

~10%

>90%>85%

~60%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

GSM/EDGE WCDMA/HSPA LTE

2012 2018

Source: Company data.

Specifically beyond the current rollouts, we also believe adoption may be rapid. For

example, LTE has been launched on 6 continents, by 156 operators active in 67 countries;

according to Qualcomm, there are 474 carriers investing in LTE technology at present.

Deployment has been facilitated by the ability to re-farm spectrum and the utilization of

multi-standard radio solutions. Re-farming enables an operator quickly to make new

spectrum available for LTE, without the need to acquire new bandwidth. To this point, at

the recent Alcatel Lucent Technology Symposium, it was noted that presently already over

70 devices exist with LTE capability, much higher than the number of 3G devices at a

similar point in time.

Driving CommScope's Wireless Business: We believe that specifically the rising

complexity of networks, given the improving spending environment, is an additional driver

for the end market for CommScope for products in its RF, antenna, and macro site

solutions business. The complexity will occur simultaneously with the increasing rollout of

04 December 2013

CommScope (COMM) 8

LTE over the next five years of LTE. While we note that North American wireless operators

have made large LTE investments in building more coverage in 2013, this does not

necessarily apply globally. Many wireless operators in Europe, Asia, and Latin America

are expected to commence their substantial LTE investment cycle in 2014 and beyond.

Investments are expected to continue through 2014, followed by increasing coverage by

smaller North American carriers and subsequent further spending by all North American

wireless operators. As wireless operators deploy LTE or other 4G technologies, they must

manage increasingly complex networks.

Small Cells to Allow for Ubiquitous Wireless Coverage: Adding new macro cells has

been the traditional way to increase mobile capacity and will continue as the solution of

choice in many areas; however, in certain high-density locations, macro cells are close to

their interference limits and either need to be sectored or augmented by cells closer to the

ground. Small cell DAS solutions address these challenges encountered in dense urban

areas and complement existing macro cell sites by cost-effectively extending coverage

and increasing capacity. Wireless operators view in-building coverage as a critical

component of their network deployment strategies. Key challenges for wireless operators

in providing in-building cellular coverage are signal loss while penetrating building

structures and interference created by mobile devices while connected to macro cell sites

from inside a building. In-building DAS solutions bring the antenna significantly closer to

the user, which results in better coverage and reduced interference. Additionally,

in-building DAS provides field-proven, seamless signal handover for a user between

indoor and outdoor zones that can support multi-operator, multi-frequency and

multi-protocol (2G, 3G, and 4G) applications, making it the most effective small cell

solution. The benefits of small cell DAS have become increasingly important, with the

trend toward BYOD (bring your own device) in the enterprise market.

Operator Focus on Spectrum Efficiency: Small cell DAS solutions also address outdoor

capacity issues in urban areas. At peak usage, 50% of mobile data are carried by only

15% of the macro cell sites, creating significant stress on mobile network capacity. This

urban network capacity issue can be solved by deploying small cell DAS solutions to

create small coverage areas that enable re-use of spectrum. Re-use of spectrum allows

wireless operators to optimize capacity of existing licensed spectrum by significantly

increasing repeated usage of the same frequencies within a defined coverage area.

Wireless CapEx Inflecting Upward

Improving CapEx Trends to Drive Growth and Leverage: Continued strength in CapEx

spend at U.S. and Japan carriers, an expected pick-up in spending in Korea (after a pause

in 1H13) following the recent spectrum auction, and LTE deployments beginning to

happen in Brazil will likely drive an improving CapEx environment for CommScope.

Vodafone recently increased its CapEx by around 30% through Project Spring, and we

believe that this has the potential to drive further CapEx upgrades from other major

operators in Europe, similar to what we saw in the U.S. beginning from late 2011. With

Project Spring, Vodafone aims to invest an incremental £6bn over the next three years,

with 65-75% of spend dedicated toward improving network quality,

We expect wireless CapEx in 2013/2014 to grow 6%/2% (with 2013 growth being driven

by aggressive CapEx budgets at carriers in U.S. and China), with wireless equipment

spend globally to be flat in 2013 followed by 5% growth in 2014. We believe that the U.S.

market continues to remain strong in terms of CapEx spending, along with early signs of a

pick-up in CapEx activity in Europe.

U.S. to Continue to See High Levels of CapEx Activity

Carriers in the U.S. have significantly increased their CapEx investment in 2012-14 on

wireless networks.

Wireless CapEx in the U.S. to Grow Nearly 15% in 2013, Guidance Suggests Flat in

2014: What is worth noting is that wireless CapEx in the U.S. has seen strong growth over

04 December 2013

CommScope (COMM) 9

the last few years. In fact, based on our estimates, we believe that wireless CapEx is likely

to have grown from $20bn in 2009 to around $33bn in 2013 (CAGR of 15%), driven by

carriers improving the quality of their networks in order to drive differentiation, which

includes the rollout of 4G/LTE networks. Looking at guidance from carriers, while we

believe that wireless CapEx spend may remain flat in 2014, we would equally note that it is

already running at a high level of slightly over $34bn per annum. In addition, we believe

there may be upside to 2014 guidance as carriers continue to look for ways to differentiate

by improving the quality of their 4G networks.

Exhibit 6: Wireless CapEx in the U.S. Likely to Grow to $34bn in 2013 and Then Remain at Those Levels for 2014

in US$ millions, unless otherwise stated.

Wireless CapEx (US$ mn) Q112 Q212 Q312 Q412 Q113 Q213 2009 2010 2011 2012 2013E 2014E

Verizon 1,885 2,048 2,133 2,791 1,992 2,278 7,152 8,438 8,973 8,857 9,646 9,982

AT&T 2,324 2,345 2,709 3,417 2,296 3,033 6,066 9,171 9,794 10,795 11,335 11,639

Sprint 710 1,012 1,376 1,786 1,706 1,728 1,161 1,444 2,416 4,884 7,419 7,405

T-Mobile US 747 539 717 898 1,231 1,111 3,687 2,819 2,729 2,901 4,343 4,019

Leap 146 119 106 63 26 23 680 399 442 434 165 200

MetroPCS 144 182 262 258 832 790 890 846

Total (US$ mn) 5,956 6,245 7,303 9,212 7,251 8,173 19,578 23,061 25,243 28,717 32,908 33,245

% change yoy -3% -8% 21% 46% 22% 31% 0% 18% 9% 14% 15% 1%


Wireless CapEx to Sales Ratio Also Rising by Around 4pp in the Last Three Years:

One of the factors that has helped this continued increase in CapEx investment across all

U.S. carriers has been the consistent level of growth in the services revenue. In fact, we

note that the cumulative wireless services revenue for the top four carriers in the U.S.

(Verizon, AT&T, Sprint, and T-Mobile US) has grown around 5% per year over the last

three years. Seeing their services revenue rise, carriers have continued to focus on

creating differentiation, such as network quality. As such, despite growth in services

revenue, CapEx to services revenues for wireless operations for the top four carriers in the

U.S. has risen from 14% in 2010 to over 18% in 1H13.

Exhibit 7: U.S. Wireless Services Revenue Growing at 5% pa Exhibit 8: Wireless CapEx to Service Revenue Rising in U.S.

-10%

-5%

0%

5%

10%

15%

20%

25%

2009 2010 2011 2012 1H13

Wir

ele

ss

Serv

ices

Reve

nu

e g

rwo

th (

%)

Verizon AT&T Sprint T-Mo US Top 4 US

13.3

%

12.4

%

14.2

%

14.8

%

16.2

%

18.3

%

0%

5%

10%

15%

20%

25%

30%

2008 2009 2010 2011 2012 1H13Wir

ele

ss

-C

ap

ex t

o S

erv

ice R

eve

nu

e (

%)

Verizon AT&T Sprint T-Mo US Top 4 US

Source: Company data, Credit Suisse research. Source: Company data, Credit Suisse research.

Entry of Softbank in the U.S. Market Also Led to CapEx Hikes Across the Board:

Apart from the rollout of LTE networks, another driver for CapEx hikes in the U.S. has

been the merger of Sprint and Softbank. Sprint had plans to increase its CapEx from $3bn

in 2011 to around $6bn in 2012 to deal with its network modernization plans and rollout

LTE networks. Additionally, the entry of Softbank in the U.S. market resulted in further

04 December 2013

CommScope (COMM) 10

CapEx intensity among carriers in an attempt to build a better quality network to drive

differentiation. Specifically, we would note the following at each of the top four operators in

the region.

■ Sprint and Softbank have noted that they plan to spend $8bn per year over

2013/2014 in order to rollout LTE, up from $5.4bn it spent in 2012 on CapEx.

■ AT&T had increased its CapEx from $20bn in 2012 to $21bn in 2013. (Initially, it had

increased its CapEx guidance for 2013 to $22bn in Nov 2012 but subsequently

lowered it to $21bn in the next few months, as it was on track for LTE rollouts.) This

would imply 6% yoy growth in total CapEx, but within this, we believe that wireless

CapEx may be up 18% yoy (already up 27% yoy in 1H13), as the company continues

to invest more on its wireless network as opposed to wireline.

■ Verizon was initially planning to keep its CapEx flat at $16.2bn for 2013, but it recently

noted plans to increase it slightly from $16.4bn to $16.6bn (up 2% yoy at the mid-point

of the range). More specifically, we would note that wireless CapEx within this is likely

to grow close to 10% yoy (already up 9% yoy in 1H13), as the carrier continues to

migrate higher proportion of group CapEx to its wireless operations.

■ We note that, even though Verizon has guided to flat CapEx, recent comments by the

company CFO Fran Shammo indicate that this could be biased upward, given

customers are seeing lower data speeds in a number of large cities.

"There are certain pockets where we're absolutely going to experience that down tick

from the LTE network down to 3G because of capacity constraints…the three major

cities that are where we're seeing some of these pressures, which [are] New York,

San Francisco, Chicago." (Fran Shammo, November 12, 2013)

■ T-Mobile USA and Metro PCS have also embarked upon an aggressive network

strategy since their merger announcement in late 2012. Although they initially were

planning to invest $4.7bn to $4.8bn on CapEx in 2013 (up from combined $3.7bn in

2012), they have recently lowered it to $4.2bn to $4.4bn. However, our EU telecoms

research team (Justin Funnell) believes that the combined entity will likely maintain

CapEx levels of $4.1bn for 2014.

Europe Weak CapEx Trends So Far—Vodafone a Trigger for Change

One of the key reasons for CapEx weakness has been the vicious circle of lack of revenue

growth, declining EBITDA margins, and weak cash flows, thereby resulting in weak CapEx

trends.

Vodafone Now Looking for £7bn of Incremental Investment by March 2016: Vodafone

has been maintaining flat CapEx spending for its European operations, similar to its group

level trend in the last two to three years. However, in its FY13 (ending March 2013), it is

worth noting that, although group CapEx was roughly flat, its CapEx spend in Europe

actually grew 7% yoy, mainly driven by investments in Germany and the UK. In addition,

the company launched a new program called Project Spring in September 2013, whereby

it was targeting an increased level of CapEx investment (£6bn over the next three years)

to drive network advantage over competition especially in Europe. On its first half FY13

results, the carrier raised the level of incremental CapEx to £7bn by March 2016.

Recently, Vodafone provided further details around its Project Spring program, whereby it

raised incremental CapEx investment from £6bn (announced in September 2013) to £7bn

by March 2016, with around £0.5bn being committed for the current fiscal year (ending

March 2014). In addition, the company also noted this incremental CapEx investment will

have slight weighting toward FY14/15, which points to some level of acceleration.

04 December 2013

CommScope (COMM) 11

Exhibit 9: Vodafone CapEx Spend in Europe Has Already Seen Some Pick Up in Early 2013

in GBP millions, unless otherwise stated; Vodafone financial year ending March.

Vodafone CapEx (£ mn) H1 10/11 H2 10/11 H1 11/12 H2 11/12 H1 12/13 H2 12/13 FY 09/10 FY 10/11 FY 11/12 FY 12/13

Vodafone Germany 342 482 410 470 445 628 766 824 880 1,073

% change yoy 3% 11% 20% -2% 9% 34% 8% 7% 22%

Vodafone UK 178 338 219 356 231 370 494 516 575 601

% change yoy 26% -4% 23% 5% 5% 4% 4% 11% 5%

Vodafone Italy 260 330 269 352 239 328 610 590 621 567

% change yoy -13% 6% 3% 7% -11% -7% -3% 5% -9%

Vodafone Spain 220 297 147 282 152 225 543 517 429 377

% change yoy 29% -20% -33% -5% 3% -20% -5% -17% -12%

Vodafone Other Europe 521 709 497 595 417 823 1,282 1,230 1,092 1,240

% change yoy 11% -13% -5% -16% -16% 38% -4% -11% 14%

Total Vodafone Europe 1,521 2,156 1,542 2,055 1,484 2,374 3,695 3,677 3,597 3,858

% change yoy 8% -6% 1% -5% -4% 16% 0% -2% 7%


Incremental CapEx Seems to Be Directed Toward Mobile Networks; Good For

Wireless Equipment Vendors, Especially Ericsson. Vodafone was earlier targeting

£6bn of incremental investment over the next three years, of which £2.7bn to £3.0bn of

CapEx was aimed at Mobile Networks. Under the revised plan, Vodafone is targeting £7bn

of incremental CapEx under Project Spring, of which £4.5bn is aimed at Mobile Networks

(£3.0bn for Europe and £1.5bn for AMAP). Given this incremental spend is being directed

at Mobile Networks, we would see this as a positive for wireless equipment vendors with

strong positioning in Europe, specifically Ericsson, and to a certain extent NSN as well.

Note this is in addition to £5bn of Mobile Network CapEx already planned by Vodafone for

Europe and £3bn for Mobile Networks in AMAP regions by March 2016.

Overall Vodafone Is Looking at Significant Build Plans by 2016: Combining

Vodafone's targets for both Europe and AMAP regions, we would note that the carrier is

looking for significant build plans for its mobile network over the next 2.5 years, with:

■ 47,000 new 2G sites to deliver improved voice service (lower dropped call rate and

improved call set up success);

■ 73,000 new 3G sites to offer better quality of 3G service (higher levels of coverage

and increased data speeds);

■ 77,000 new 4G sites as part of LTE rollouts and expand outdoor coverage; and

■ 70,000 new small cells or Wi-Fi sites.

04 December 2013

CommScope (COMM) 12

Exhibit 10: Can CapEx to Sales Ratio in Western Europe Rise Similar to the U.S.?

13.3%12.4%

14.2%14.8%

16.2%

18.3%

10.0% 9.6% 9.9%

11.3%12.4% 12.1%

0%

5%

10%

15%

20%

2008 2009 2010 2011 2012 1H13

Wir

ele

ss -

Cap

ex t

o S

erv

ice

Reven

ue (

%)

US W Europe

Source: Company data, Credit Suisse research, EU telecoms research team (Justin Funnell).

CapEx to Sales Significantly Behind in W.E. When Compared to the U.S.: CapEx

trends within Europe has been lackluster over the last few years, with most carriers

looking to maintain flat investment levels. Furthermore, with service revenues having been

under pressure, the CapEx to sales ratio has seen slight improvement despite flat CapEx.

When comparing this to the U.S., what is striking is that service revenues have grown at

around 5% pa, but wireless CapEx has growing significantly faster, resulting in the CapEx

to sales ratio rising from nearly 12.5% in 2009 to slightly over 18% in 1H13. When

comparing this to W.E., we see that CapEx to sales ratio has only picked up from around

10% in 2009 to 12% in 1H13.

LATAM to Pick Up as LTE Networks Are Beginning to Get Deployed

Capex in the region saw weakness during 2012 after bulk of the 3G rollouts were done,

especially in Brazil. Now with LTE rollouts starting to take place from 1H13, we believe this

is likely to drive revenue growth for equipment vendors in the region.

LTE Deployments Starting to Happen Now: With deadlines in place for rollout of LTE

networks in Brazil, we believe all four operators in the country ( Vivo, Claro, TIM, and Oi)

are going to step up their efforts to deploy LTE networks across a number of cities over

the next 12-24 months. In fact, as per the coverage plans, it is expected that operators are

likely to extend LTE coverage to all cities with more than 500K population by May 2014.

(See Exhibit 11.)

Exhibit 11: 4G Coverage Plans in Brazil Suggest Significant Activity in the Next 12

Months

Deadline Coverage Plans

Apr 2013 All cities hosting the Confederations Cup 2013

Dec 2013 All cities hosting and co-hosting the World Cup 2014

May 2014 All capitals and cities having more than 500K inhabitants

Dec 2015 All cities having more than 200K inhabitants

Dec 2016 All cities having more than 100K inhabitants

Dec 2017 All cities having between 30K and 100K inhabitants

Source: Teleco Brazil, Credit Suisse research.

4G Population Coverage to Expand: Looking at 3G population coverage levels, we

would note that it has almost reached 90% levels in Brazil compared to around 65% in

2009. Now with LTE population coverage at around 20%, we believe that number is set to

rise significantly over the next 12-24 months looking at the coverage plans in the region.

04 December 2013

CommScope (COMM) 13

Also looking at the number of cities covered, we see that currently only 20 cities are

covered with LTE as opposed to around 3,400 cities with 3G coverage.

Exhibit 12: LTE Coverage Is Only Starting to Happen Now . . . Exhibit 13: . . .with Significant Pick-Up in Coverage to Come

Cities covered in Brazil

Operator 1Q13 2Q13 1Q13 2Q13

Vivo 3,122 3,131 0 17

Claro 1,119 1,187 6 12

TIM 593 898 0 6

Oi 734 865 0 6

Total 3,370 3,436 6 20

3G coverage 4G coverage

59%65%

73%

83%88% 89% 90%

3%

18%

0%

25%

50%

75%

100%

2008 2009 2010 2011 2012 1Q13 2Q13

Po

pu

lati

on

co

ve

rag

e (

%)

3G 4G

Source: Teleco Brazil, Credit Suisse research. Source: Teleco Brazil, Credit Suisse research.

Outpacing the End Market?

We expect the wireless business to grow around 2% in 2014 to $2.2bn and ~5% per year

through cycle to about $2.3bn by 2015, as it is leveraged to the wireless infrastructure

market. As we discussed on our recent upgrade on Ericsson, this market is seeing a

cyclical and structural pick-up. CommScope supplies to all the vendors in the market so it

makes them, in aggregate, exposed to a service provider spend recovering.

Exhibit 14: CommScope Wireless Revenues vs. Mobile Infrastructure Industry Revenues

46,000

48,000

50,000

52,000

54,000

56,000

58,000

60,000

0

500

1,000

1,500

2,000

2,500

3,000

2007 2008 2009 2010 2011 2012 2013E 2014E 2015E

Mo

bile

Infr

astr

uct

ure

Ind

ust

ry R

even

ue

($m

n)

Co

mm

Sco

pe

Rev

enu

es (

$m

n)

CommScope Wireless Division Revenue Mobile Infrastructure Industry Revenue


It is worth noting that, while about ten years ago there were multiple RF and antenna

companies, now the industry is more consolidated. The key competitors in this space

currently are all largely outside the U.S. and include Comba Telecom Systems based in

Asia, KATHREIN-Werke KG, RFS (which is part of Alcatel-Lucent SA), and a to lesser

extent Ericsson and Huawei.

04 December 2013

CommScope (COMM) 14

Enterprise: Dependent on the Cycle CommScope's Enterprise segment provides solutions for datacenters and commercial

buildings through voice, video, data, and bundled solutions that support a variety of

mission-critical applications that include storage area networks, backhaul, cloud

applications, and streaming media. Solutions for the datacenter also include datacenter

infrastructure management (DCIM) software as well as intelligent building solutions as

detailed in the following section. CommScope's Enterprise business constitutes ~25% of

sales. Looking ahead, we expect revenues of $834mn and $909mn in FY13 and FY14,

with operating margins of 19.7% and19.7%, respectively.

Exhibit 15: Enterprise segment P&L— revenue growth of 9% and 10% in FY14 and FY15 US$ in millions, unless otherwise stated.

1Q13 2Q13 3Q13 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E 2012 2013 2014 2015

Enterprise Sales 192 219 212 211 201 233 238 237 847 834 909 1,000

QoQ Growth % -8.1% 14.0% -3.0% -0.6% -4.5% 15.8% 1.9% -0.4%

YoY Growth % -4.5% -2.8% 0.1% 1.1% 5.0% 6.7% 12.0% 12.2% -6.4% -1.5% 9.1% 10.0%

Enterprise sales as % of group 23.8% 23.2% 23.9% 25.7% 24.6% 24.6% 26.1% 27.7% 25.5% 24.1% 25.7% 27.0%



Enterprise Op. Inc as % of group 26% 31% 29% 28% 22% 31% 35% 33% 25% 19% 20% 21%


Infrastructure Solutions: CommScope's Enterprise solutions include optical fiber and

structured cable solutions, intelligent infrastructure software, network rack and cabinet

enclosures, intelligent building sensors, advanced LED lighting control systems, and

network design services. Within the solutions business, CommScope's key brands include

Systimax and Uniprise on the solution side and Redwood systems on the LED lighting

control/high density sensor solutions.

Datacenter Solutions: In addition to physical layer solution offerings, the company also

has DCIM software under the brand name iTRACS, which provides network intelligence

capabilities.

Key Drivers

Datacenter Spending Expected to Grow: As datacenters increase in size and number of

assets, so does the TCO and difficulty of managing datacenter infrastructure. DCIM

technology such as iTRACS helps improve the operational efficiency within a datacenter

while reducing costs in areas such as efficient power usage, utilization, applications, and

performance.

Transition to Smart Buildings: With the advent of BYOD across the enterprise space

and need for ubiquitous coverage and capacity, there is an increasing need for

infrastructure to support growing bandwidth requirements, in-building cellular coverage,

capacity, and monitoring software. In addition building automation, CommScope's systems

allow for enhanced energy efficient buildings.

04 December 2013

CommScope (COMM) 15

Broadband—Transition to Solutions Broadband constitutes about 15% of CommScope's overall revenues. CommScope's

Broadband solutions provide cable and communication products supporting multi-channel

video, voice and high-speed data services provided by cable companies (MSOs).

CommScope provides coaxial cable for HFC networks as well as fiber optic cable for North

American MSOs. This business is in gradual decline, as technology shifts from copper to

fiber optics. Looking ahead we expect revenues of $482mn/$443mn in FY13/FY14, with

operating margins of 5.1%/8.9%, respectively.

Exhibit 16: Broadband segment P&L – Declining Sales Although Margins Expected to Stabilize at ~11% US$ in millions, unless otherwise stated.

1Q13 2Q13 3Q13 4Q13E 1Q14E 2Q14E 3Q14E 4Q14E 2012 2013 2014 2015

Broadband Sales 118 133 125 107 112 117 112 101 564 482 443 420

QoQ Growth % -5.4% 12.4% -6.2% -14.2% 4.9% 4.3% -4.0% -9.7%

YoY Growth % -16.9% -10.9% -15.8% -14.3% -5.0% -11.9% -9.8% -5.2% -6.4% -14.4% -8.2% -5.3%

Broadband sales as % of group 14.7% 14.1% 14.0% 13.0% 13.7% 12.4% 12.3% 11.8% 17.0% 14.0% 12.5% 11.3%



Broadband Op. Inc as % of group 2% 7% 3% 4% 5% 8% 8% 5% 6% 3% 4% 5%


Key Drivers

Demand for Broadband products depends primarily on capital spending by cable television

system operators for maintaining, constructing, rebuilding, or upgrading their systems. We

believe the following themes will play a significant role in determining broadband demand.

Multi-Screen/Web-Based Video: A growing number of connected devices, continued

consumer demand for smartphones, and over-the-top services and streaming will create

ongoing demand for Broadband products.

Network Transition/Traffic: Further investment in IP networks, driven by deep fiber

solutions and a residential real estate recovery could be a potential catalyst for

CommScope products.

04 December 2013

CommScope (COMM) 16

Deleveraging Driving Net Income One of the benefits of the IPO from a financial model perspective is that CommScope will

likely be able significantly to deleverage itself in the longer term. With the IPO proceeds

and increasing levels of free cash flow each year, the company plans to reduce its net

leverage. We forecast the leverage ratio to decline from 3.9x in 2012 to 2.2x in 2015, with

net debt decreasing from $2.2 billion in 2012 to $1.6 billion in 2015. Additionally, we

estimate interest payments in 2015 will be down 25% from 2012, helping net income grow

at a CAGR of over 20% during this period.

Margins Risks to the Upside

Following the acquisition by Carlyle, the company has been reasonably successful in

transforming part of the business. Revenues have grown at a 10% CAGR from $2.3 billion

in 2010 to $3.5bn over the last 12 months. Looking ahead, we expect revenues to

continue to grow at a 4% CAGR to about $3.7bn by 2015. Additionally, adjusted operating

income has grown at a 29% CAGR from $284mn in 2010 to $603mn in the last 12 months.

We forecast this to continue to grow at a 10% CAGR to ~$670mn by 2015, with margins

expanding to 18.1%.

Exhibit 17: Revenue CAGR of ~4% Through 2015 Exhibit 18: OMs Should Continue to Be Stable ~18%

3,275

3,322

3,454

3,533

3,710

3,000

3,100

3,200

3,300

3,400

3,500

3,600

3,700

3,800

2011 2012 2013E 2014E 2015E

Ad

j. O

per

atin

g in

com

e ($

mn

)

380

501

614 629671

11.6%

15.1%

17.8% 17.8% 18.1%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

0

100

200

300

400

500

600

700

800

2011 2012 2013E 2014E 2015E

Ad

j. O

per

atin

g m

argi

n (

$m

n)

Ad

j. O

per

atin

g in

com

e ($

mn

)

Adj. Operating income ($mn) Adj. Operating margin ($mn) Source: Company data, Credit Suisse estimates. Source: Company data, Credit Suisse estimates.

Margin Improvement Initiatives

Bundled Solutions: One of the key factors driving overall margin improvement has been

selling bundled solutions to customers. For example, CommScope's RF cell site solution

enables wireless operators to reduce overall cost since they do not have to buy individual

components, which in turn improves the company's margin profile.

Portfolio Pruning: While private, the company further optimized its portfolio by exiting a

number of non-core businesses such as merchant RF subsystems and the geolocation

business.

Improved Channel Relationships and Distribution: The company also improved its

sales channel by expanding efforts into China and India. In addition, within Wireless, the

company has made significant headway with wireless operators with regard to providing

bundled solutions, as previously discussed.

R&D Investments: Since being taken private by Carlyle, the company has grown its R&D

investments significantly, particularly through initiatives such as Breakthrough Enabling

Technologies, which is a formalized program rapidly to accelerate new growth products to

commercialization.

04 December 2013

CommScope (COMM) 17

Acquisitions: The company also closed on a number of strategic acquisitions focused on

key growth initiatives within the business.

■ LiquidxStream Systems (June 2011): Broadens existing offering of broadband

solutions for the MSO market.

■ Argus (September 2011): Pairs CommScope's existing antenna offering with

Argus’ antenna research and technology expertise.

■ iTRACS (March 2013): Complements existing datacenter intelligence software

creating a broad DCIM platform.

■ Redwood Systems (July 2013): LED lighting controls capabilities to intelligent

building infrastructure solutions.

FCF Healthy, Deleveraging in the Near Term

With the IPO proceeds and increasing levels of free cash flow each year, the company

plans to reduce its net leverage. We forecast the leverage ratio to decline from 3.9x in

2012 to 2.2x in 2015, with net debt decreasing from $2.2 billion in 2012 to $1.6 billion in

2015.

Exhibit 19: Leverage Ratio Will Decline to 2.2x by 2015, with Net Debt under $2.0Bn in millions, unless otherwise stated.

FY 2012 FY 2013E FY 2014E FY 2015E

EBITDA 571 670 683 725

EBITDA Margins 17.2% 19.4% 19.3% 19.5%

Free Cash Flow 258 257 299 316

% Margin 7.8% 7.4% 8.5% 8.5%

% FCF Conversion NA NA 183.3% 148.3%

Gross Debt 2,471 2,399 2,128 1,830

Gross Cash 264 199 228 233

Net Debt 2,206 2,199 1,900 1,597

Leverage Ratio 3.9 3.3 2.8 2.2


Improving Free Cash Flow: Following its IPO, CommScope will likely benefit from

improving free cash flow each year, rising from $193 million in 2013 to an estimated $303

million in 2015. Free cash flow conversion will be well over 100%, at 183% and 148% in

2014 and 2015. This is partly a result of the company deleveraging and benefitting from

lower interest expense. Additionally, CommScope will see rising EBITDA from $570 million

to $725 million in 2015.

Improving Its Capital Structure: More specifically, the company plans to use the net IPO

proceeds to redeem long term debt. As shown in Exhibit 20 we assume declining debt

levels, from $2.5 billion in 2013 to $1.8 billion in 2015. Ultimately, CommScope plans to

reduce its net debt balance to $1.6 billion by 2015, which would imply a net leverage goal

of 2.2x in 2015 from an estimated ratio of 3.3x for 2013.

04 December 2013

CommScope (COMM) 18

Exhibit 20: CommScope Will Be Decreasing Its Leverage Following Its IPO US$ in millions, unless otherwise stated

2,715

2,471 2,399

2,128

1,830

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

-

500

1,000

1,500

2,000

2,500

3,000

LBO 2012 2013 2014 2015

Leve

rage

Rat

iio

Gro

ss D

ebt


Increasing Free Cash Flow Means Reduced Leverage: We estimate that, in the long

term, the company can generate over $300 million of annual free cash flow. This is one

mechanism by which CommScope will be able to reduce its leverage. Per the company's

guidance, we forecast substantial debt payments of over $800 million this year (using IPO

proceeds) and a further $270 million and $300 million in the fourth quarters of 2014 and

2015. Additionally, the company has a history of issuing special dividends, returning a total

$750 million to shareholders throughout 2012 and 2013. As the company's capital

structure improves, there may be more scope for cash distribution in the future.

Exhibit 21: Increasing FCF Will Help Pay Down Debt US$ in millions, unless otherwise stated

Exhibit 22: Cumulative FCF to Grow to over $2bn US$ in millions, unless otherwise stated

0

50

100

150

200

250

300

350

400

450

500

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013E FY 2014E FY 2015E

Free

Cas

h F

low

($

mln)

0

500

1,000

1,500

2,000

2,500

FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 FY 2013E FY 2014E FY 2015E

Cu

mu

lati

ve F

ree

Cas

h F

low

($

mln

) 13% CAGR 2012-2015

Source: Company data, Credit Suisse estimates. Source: Company data, Credit Suisse estimates.

Decreasing Leverage Gives EPS Upside. As a result of paying down debt, we forecast

CommScope's interest payments to decline 20% in 2014 and another 15% in 2015. We

believe that these reduced payments should positively impact EPS by $0.14 in 2014 and

$0.09 in 2015. With a more shareholder-friendly capital structure, CommScope will likely

have more flexibility to both grow earnings and distribute excess cash. As shown Exhibit

23, interest expense declining 9% from 2012 to 2015, would contribute to 20% pre-tax

income growth and 16% EPS growth over this period.

04 December 2013

CommScope (COMM) 19

Exhibit 23: Net Income Increasing by 23% Helped by a 9% Decline in Interest Payments US$ in millions, unless otherwise stated.

FY 2012 FY 2013E FY 2014E FY 2015E 2012-2015 CAGR

Operating Income 501 614 629 671 10.2%

D&A 262 259 251 247 -2.0%

Amortization 193 203 197 193 0.0%

Adj EBITDA 571 670 683 725 8.3%

Operating Income 501 614 629 671 10.2%

Other Income (15) (54) (6) (18) 5.2%

Interest Expense (189) (214) (171) (145) -8.5%

Interest Income 3 3 3 3 -6.4%

Other Adjustments 17 71 19 28

Pre Tax Income 317 421 475 539 19.3%

Income Tax Expense 132 162 172 191 13.2%

Net Income non-GAAP 185 259 303 347 23.3%

EPS 1.20 1.61 1.66 1.88 16.2%


Refinancing Long Term Debt Could Lead to an additional $15 million in savings.

Within its capital structure, CommScope currently has three different primary loans

outstanding. It has one senior, secured term loan due 2018, another subordinate loan due

2019, and a second subordinate note due 2020. In general the company will be

deleveraging, paying down over $800 million in debt this year and nearly $300 million in

2014 and 2015. In addition to this, though, management has highlighted that it may be

able to refinance its loan due 2019 that currently has an 8.3% interest rate in the first

quarter of 2015. As shown in Exhibit 24, per management commentary, it is possible that

by refinancing this loan to a lower interest rate from 8.3% to approximately 5.3%, the

company could save a further $15 million in interest payments in 2015, which would be a

benefit of 5 cents per share in EPS.

Exhibit 24: By refinancing its debt due in 2019, CommScope could save $15mn in 2015 in millions, unless otherwise stated

FY 2013E FY 2014E FY 2015E

Principal Amount Outstanding 2,399 2,128 1,830

Revolver - - -

Term Loan (7.1%) 878 879 879

2019 Notes (8.25%) 1,100 828 529

2020 Notes (6.63%) 421 421 421

Revolver 0 0 0

Term Loan 68 62 62

2019 Notes 121 85 40

2020 Notes 25 28 28

Other (0) 0 0

Interest with refinancing 214 175 130

Current interest forecast 214 171 145

Interest Rates with refinancing

Revolver 3.00% 3.00% 3.00%

Term Loan 7.10% 7.10% 7.10%

2019 Notes 8.25% 8.25% 5.25%

2020 Notes 6.63% 6.63% 6.63%

Source: FactSet, Credit Suisse estimates

04 December 2013

CommScope (COMM) 20

The company Could Support Debt and Initiate Cash Distribution: As shown, we note

that, based upon our estimates, CommScope would exit 2015 with $233 million in cash

and $1.8 billion in debt. With EBITDA growing and declining leverage, the company may

benefit from better debt ratings. In the longer term, we believe that, given the 300 million of

FCF per year (shown in Exhibit 21), the company could also return cash to shareholders.

Management has outlined the following uses of cash in order of priority:

1) Reinvesting in the business

2) Strategic acquisitions

3) Deleveraging

4) Returns to shareholders

04 December 2013

CommScope (COMM) 21

Valuation—FV of $20 We focus our valuation on a three-pronged approach: (1) EV/EBITDA (comparing

EV/EBITDA multiples with peers), (2) discounted cash flow (DCF) analysis, and (3) Credit

Suisse HOLT® analysis. Our approach suggests that the company’s equity value is

$3.1-3.3 billion, or $19.20-20.77 per share, with a blended value of $20.03 per share. Our

target price for CommScope is $20.

Exhibit 25: CommScope Blended Average Value of $20.03 in thousands, except per share data.

Approach Equity value (in $mn) Valuation Value/Share ($)

EV/EBITDA 3,054 8.4x EBITDA $19.20

DCF 3,199 Term. growth of 1%,

WACC of 9.2% $20.11

Credit Suisse HOLT 3,303 R&D life of 7 years $20.77

Blended Average 3,185 20.03


EV/EBITDA Multiple Suggests FV of $19.20 per Share

We Apply an EV/EBITDA Multiple of 8.4x on CommScope’s 2014 EBITDA Estimate:

CommScope is a slow growing, mature company, with an improving capital structure and

increasing free cash flow generation in the coming years. As such, we believe that an

EV/EBITDA valuation is an appropriate approach.

Exhibit 26: 8.4x our 2014 EBITDA Estimate Implies a Value of $19.20 per Share US$ in millions, unless otherwise stated.

CommScope CY14 EBITDA 683

EBITDA Multiple 8.4x

Implied EV 5,757

Net Debt 2,703

Implied Equity Value 3,054

Implied Stock price 19.20


Apply an 8.4x Multiple on CY14 EBITDA Estimate Based on Comps: To analyze a fair

earnings multiple for CommScope, we have looked at the current EV/EBITDA multiples for

the company along with the related peer group of component companies. Given

CommScope's superior margin profile to comparable component companies albeit slightly

lower sales growth, we believe the company can achieve a multiple of 8.4x, on our 2014

EBITDA estimate. This would still be a 17% discount to the component peers and a

premium of 12% to broader telecom equipment/infrastructure peers.

04 D

ec

em

ber 2

013

Co

mm

Sco

pe (C

OM

M)

22

Exhibit 27: CommScope Is More Profitable Yet Trades at a Discount to component companies on an EV/EBITDA Valuation

Company P/E (x) EV/EBITDA Mkt cap/ FCF

2012 2013E 2014E 2012 2013E 2014E 2012 2013E 2014E

Component Companies

Amphenol 25.0 22.9 20.7 15.0 14.0 12.9 24.8 19.8 22.7

Anixter 15.9 15.3 13.5 9.1 9.4 8.6 14.2 14.6 14.6

Comba Telecom NM 53.4 13.8 73.9 17.7 8.8 NM NM NM

Mean 20.4 30.5 16.0 32.7 13.7 10.1 19.5 17.2 18.6

Telecom equipment/ infrastructure

Motorola Solutions 20.6 13.9 15.9 18.7 9.2 8.6 18.1 28.3 19.5

Alcatel-Lucent NM NM NM NA 9.7 7.2 NM NM NM

Ericsson 19.7 15.4 13.3 12.1 8.2 7.2 NM 16.4 13.7

Finisar 31.5 18.0 13.3 15.8 8.2 7.1 NM 33.9 18.1

Mean 23.9 15.8 14.2 15.5 8.8 7.5 18.1 26.2 17.1

CommScope

CommScope 14.5 10.8 10.5 18.3 8.2 8.0 10.7 10.7 9.2

1) Superior Profitabil ity to component companies but trading at a discount. CommScope has superior gross, operating, and EBITDA margins compared to the

component companies in the peer group. However it trades at a 21% discount to this peer group on an EV/EBITDA basis for 2014. Even with slightly lower sales growth,

given its margin profile, we note that 8.4x is an appropriate multiple.

2) Small prem ium to telecom equipment peers with higher EBITDA margins. Compared to broader telecom equipment peers, CommScope has in-line gross margins but

higher operating and EBITDA margins. However, it does have slightly lower sales growth compared to these companies. With this superior profitability, we believe a small

premium is warranted.

…yet it trades at a discount to component companies on an EV/EBITDA valuation

CommScope is more profitable than its peers…

1

2

CompanyMrkt Cap Net Debt EV Sales Growth Gross margin Operating Margin EBITDA Margin FCF Margin

2013E 2014E 2013E 2014E 2013E 2014E 2013 2014 2013E 2014E

Component Companies

Amphenol 13,706 586 14,292 5.7% 6.7% 32% 32% 20% 20% 22.6% 22.9% 15% 12%

Anixter 2,823 740 3,563 -0.8% 4.4% 23% 23% 6% 6% 6.1% 6.4% 3% 3%

Comba Telecom 4,075 501 4,576 -1.9% 13.9% 27% 29% 2% 6% 4.2% 7.4% 0% 2%

Mean 1.0% 8.3% 27.1% 27.7% 9.1% 10.6% 11.0% 12.2% 6.1% 5.8%

Telecom equipment/ infrastructure

Motorola Solutions 17,021 (691) 16,330 -0.2% 2.8% 49% 49% 18% 19% 20.4% 21.4% 7% 10%

Alcatel-Lucent 8,255 767 9,022 1.0% 1.2% 32% 32% 2% 4% 6.4% 8.4% NA NA

Ericsson 258,249 (28,983) 229,266 1.2% 3.0% 33% 33% 8% 10% 12.1% 13.3% 7% 8%

Finisar 2,166 (272) 1,894 14.6% 14.8% 35% 35% 14% 15% 21.4% 21.6% 6% 10%

Mean 4% 5% 37% 37% 11% 12% 15.1% 16.2% 7% 9%

CommScope

CommScope 2,760 2,703 5,462 4.0% 2.3% 35% 35% 18% 18% 19.4% 19.3% 7% 8%


04 December 2013

CommScope (COMM) 23

DCF Yields an Equity Value of $3.2 billion, or $20.11 per Share, for CommScope

Our discounted cash flow analysis for CommScope suggests a fair value of $20.11 per

share. This is based on the following assumptions.

Revenue Growth to Slow Over Time: We forecast revenue growth to accelerate to 5% in

2015. Beyond 2015, we expect revenue to slow to 3% and then 1% in the long term. We

assume a perpetual growth rate of 1%.

EBITDA Margins Stable in the Long Term: We estimate CommScope's EBITDA margins

will be stable at ~20% through 2020. As previously discussed, CommScope will likely be

growing revenue with stable margins for several years, thus maintaining strong levels of

EBITDA.

Terminal Growth Rate of 1.0% and WACC of 9.2%: For the DCF analysis, we have

assumed a terminal growth rate of 1.0% for CommScope. We estimate the weighted

average cost of capital (WACC) to be 9.2%.

Exhibit 28: CommScope WACC Calculation US$ in millions, unless otherwise stated.

Beta 1.10

Risk free rate 4.0%

Equity Risk Premium 6.0%

Cost of Equity 10.6%

Avg cost of debt (pretax) 8.0%

Avg Cost of debt (post tax) 4.9%

Tax rate 38.5%

WACC 9.2%


04 D

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em

ber 2

013

Co

mm

Sco

pe (C

OM

M)

24

Exhibit 29: CommScope DCF Yields a Value of $20.11 US$ in millions, unless otherwise stated.

2012 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E

Revenue 3,322 3,454 3,533 3,710 3,877 4,032 4,153 4,277 4,363 4,450 4,494 4,539

Gross Profit 1,061 1,193 1,221 1,283 1,321 1,354 1,373 1,393 1,418 1,446 1,438 1,430

Gross Margin (%) 31.9% 34.6% 34.6% 34.6% 34.1% 33.6% 33.1% 32.6% 32.5% 32.5% 32.0% 31.5%

SG&A 461 493 480 494 505 513 516 531 542 553 558 564

% of sales 13.9% 14.3% 13.6% 13.3% 13.0% 12.7% 12.4% 12.4% 12.4% 12.4% 12.4% 12.4%

R&D 122 130 127 134 132 125 117 120 123 125 126 128

% of sales 3.7% 3.8% 3.6% 3.6% 3.4% 3.1% 2.8% 2.8% 2.8% 2.8% 2.8% 2.8%

Opex non cash adjustments 23 43 15 16 19 20 21 21 22 22 22 23

EBIT 501 614 629 671 703 735 762 763 775 791 776 761

EBIT Margin 15.1% 17.8% 17.8% 18.1% 18.1% 18.2% 18.3% 17.8% 17.8% 17.8% 17.3% 16.8%

D&A 70 56 54 54 57 76 78 81 82 84 85 86

EBITDA 571 670 683 725 760 811 840 844 857 874 861 847

EBITDA Margin 17.2% 19.4% 19.3% 19.5% 19.6% 20.1% 20.2% 19.7% 19.6% 19.6% 19.1% 18.6%

Less: CAPEX 28 36 35 37 39 40 42 43 44 40 40 41

Working Capital change (65) 48 29 58 28 26 20 21 14 15 7 8

Interest Expense 185.6 210.9 168.3 141.8 77.5 40.3 20.8 21.4 0.4 0.4 0.4 0.5

Other Expense 15 54 6 18 19 20 20.8 21.4 21.8 22.2 22.5 22.7

Cash Flow before tax 407 321 446 470 596 685 737 737 777 797 790 775

Cash Taxes 132 162 172 191 250 261 271 271 275 281 276 270

Cash Tax Rate 41.6% 38.5% 36.1% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5% 35.5%

Free Cash Flow 275 159 274 278 346 423 466 466 502 516 514 505

Summary

PV of Free Cash Flow 2,522

Terminal Value 6,231

PV of Terminal Value 3,369

Enterprise Value 5,891

Plus: Cash & ST Investments 312

Less: Debt 3,004

Equity Value 3,199

12-month share price target $20.11


04 December 2013

CommScope (COMM) 25

Credit Suisse HOLT™

Implies a Fair Value of $20.77 per Share

Exhibit 30: HOLT™

Implies a FV of $20.77 for CommScope in millions, except per share values.

Valuation Results

PV of Existing Assets 4,220

NPV of Future Investments 1,250

+ Market Value of Investments 5

Total Economic Value 5,475

+ Share Issuance 511

- Debt & Equivalents 2,169

- Minority Interests 0

Warranted Market Cap. 3,817

Shares Outstanding 184

Warranted Share Price (USD) 20.77


CFROI® at 25% in the Long Term: To take a long-term perspective on valuation, we

utilize our forecasts for the next seven years until 2020 (from our discounted cash flow

analysis) for Credit Suisse HOLT valuation methodology. For fiscal 2020, we project a

Credit Suisse HOLT CFROI of 24.5%. (See Exhibit 31.)

EBITDA Margins Stable at 20% in the Long Term: If top-line growth for CommScope

declines to 1.0%, we believe EBITDA margins will likely be stable, staying at 20% in the

long term.

Exhibit 31: CommScope Long Term HOLT Analysis

CFROI Results 2013 2014 2015 2016 2017 2018 2019 2020

CFROI 24.61% 23.22% 23.81% 25.11% 26.16% 27.63% 25.38% 24.51%

Transaction CFROI 10.30% 10.77% 11.56% 12.33% 13.00% 13.76% 13.21% 12.88%

Normalized Real Growth Rate 15.25% 16.77% 18.91% 21.40% 22.94% 25.28% 23.27% 21.82%

Real Growth Rate -6.28% 9.88% -0.48% -0.51% -0.55% -1.27% 7.40% 0.19%

Sales Growth 3.96% 2.30% 5.00% 4.50% 4.00% 3.00% 3.00% 2.00%

EBITDA Margins 20.20% 19.90% 19.96% 20.02% 20.12% 20.22% 19.72% 19.65%

Asset Turns 1.68 1.54 1.60 1.65 1.70 1.74 1.64 1.64

Gross Cash Flow 619 634 650 684 710 744 752 747

Non Depreciating Assets 924 935 967 1,004 1,040 1,059 1,293 1,308

Gross Investment 2,051 2,295 2,319 2,348 2,377 2,389 2,611 2,663

Life 5.6 6.8 6.8 6.8 6.9 6.9 6.9 6.9

Country Specific Discount Rate 5.00%

Size Differential -0.02%

Leverage Differential 1.56%

Company Discount Rate 6.54%

Discount Rate Used 6.56%


04 December 2013

CommScope (COMM) 26

Risks We see three primary risks to our Outperform rating on CommScope. If wireless CapEx

spending and the LTE buildouts do not occur as expected, the company will likely not

experience the growth that we currently forecast. Second, if the company's financial

performance falls short of expectations, it will likely not have the funds from free cash flow

to pay down a significant amount of debt. Third, while CommScope has the number one

market share position in its Wireless business, we may be underestimating the competitive

dynamics of the industry, which could hinder performance.

Slower Growth in Wireless CapEx: We project that wireless CapEx spending will

reaccelerate, driven by North American and Japanese carriers, LTE buildouts in Brazil,

and Vodafone's increased investment, which will subsequently drive other service

providers to spend on their networks. Should this reacceleration of spending not come to

fruition, CommScope Wireless business will not experience the levels of growth that we

currently forecast. Additionally, if the emphasis on wireless investment is driven away from

base stations related to LTE buildouts, the company's operations will not be as exposed to

this growth.

Deleveraging Not as Significant: Core to our thesis is that CommScope will benefit from

an improving end market, thus increasing revenue, as well as focus on cost management

to improve margins and free cash flow. As a result, using this cash and IPO proceeds, it

will be able to pay down debt, reducing its leverage ratio to 2.2x by the end of 2015. If the

company's financial performance is weaker than expected, it will not have the sufficient

capital not pay down as much debt as it desires. To this point, there may be concern

around the company's ability to distribute cash in the longer term.

Underestimating Competition: CommScope focuses on a very specific niche of the

wireless infrastructure market. Other communication infrastructure companies, such as

NSN, Huawei, and Alcatel-Lucent, may introduce competing products and bundle them as

part of larger sales. This would create significantly more competition than the company

currently faces.

Customer Concentration: In 2012, CommScope derived 24% of its sales from its top

three distributors, with Anixter accounting for 13% of total revenue. Due to this customer

concentration, there may be risk to the company's revenue should a relationship with a

distributor deteriorate. Additionally, CommScope may suffer if one of these distributors

loses a key customer.

04 December 2013

CommScope (COMM) 27

Management Team The senior management team at CommScope has an average of more than 25 years of

experience in connectivity solutions for the communications infrastructure industry and

have a strong track record when it comes to integrating large and small acquisitions.

Exhibit 32: A Seasoned Team

Name Position Experience

Marvin (Eddie) S. Edwards, Jr. President, CEO − President and Chief Executive Officer and a member of the Board of Directors following

the acquisition by Carlyle.

− He has also served in various capacities with Alcatel, including President of Alcatel

North America Cable Systems and President of Radio Frequency Systems.

Mark A. Olson EVP and CFO − Served as CommScope Executive Vice President and Chief Financial Officer since

February 1, 2012.

− Served as Vice President and Controller for Andrew LLC since the closing of the

Andrew acquisition. Prior to joining Andrew, he was employed by Nortel and Johnson &

Johnson.

Frank M. Drendel Director, Chairman

of the Board

− Has been CommScope's Chairman of the Board since the acquisition by Carlyle.

− He served as a director of GI Delaware, a subsidiary of General Instrument Corporation

and its predecessors from 1987 to 1992. He served as President and Chairman of

CommScope, Inc. of North Carolina, or “CommScope NC,” from 1986 to 1997, and has

served as Chief Executive Officer of CommScope NC since 1976.

Randall W. Crenshaw EVP and COO − Has been CommScope's Executive Vice President and Chief Operating Officer

following the acquisition by Carlyle. From January 1, 2010 to the acquisition, he was

CommScope's Executive Vice President and Chief Supply Officer.

Claudius (Bud) E. Watts IV Director − Claudius Watts became a member of CommScope's Board of Directors following the

acquisition by Carlyle. He currently serves as a Managing Director and Head of the

Technology Buyout Group of The Carlyle Group.

Campbell (Cam) R. Dyer Director − Campbell Dyer became a member of CommScope's Board of Directors following the

acquisition by Carlyle. He currently serves as a Managing Director in the Technology

Buyout Group of The Carlyle Group, which he joined in 2002.

Source: Company data, Credit Suisse.

Marvin (Eddie) S. Edwards, Jr., President and CEO: Eddie Edwards has served as

CommScope's president and chief executive officer and a member of the board of

directors following the acquisition by Carlyle. From January 1, 2010, to the acquisition, Mr.

Edwards was CommScope's president and chief operating officer. Prior to that, he served

as CommScope's executive vice president of business development and general manager,

wireless network solutions. He has also served in various capacities with Alcatel, including

president of Alcatel North America Cable Systems and president of Radio Frequency

Systems.

Mark A. Olson, Executive Vice President and CFO: Mark Olson has served as

CommScope executive vice president and chief financial officer since February 1, 2012.

From November 2009 to January 2012, he served as CommScope's senior vice president

and corporate controller. Prior to that, he served as vice president and controller for

Andrew LLC since the closing of the Andrew acquisition. Prior to joining Andrew, he was

employed by Nortel and Johnson & Johnson.

Frank M. Drendel, Director, Chairman of the Board: Frank Drendel has been

CommScope's chairman of the board since the acquisition by Carlyle. He served as the

chairman of the board and CEO from July 28, 1997, until the acquisition. Frank Drendel

served as a director of GI Delaware, a subsidiary of General Instrument Corporation and

its predecessors from 1987 to 1992. He served as president and chairman of CommScope,

04 December 2013

CommScope (COMM) 28

Inc. of North Carolina, or CommScope NC, from 1986 to 1997 and has served as chief

executive officer of CommScope NC since 1976. From 1971 to 1976, he held various

positions within CommScope NC. Frank Drendel is a director of the National Cable &

Telecommunications Association, the principal trade association of the cable industry in

the United States, and was inducted into the Cable Television Hall of Fame in 2002. He

joined the board of directors of Tyco International, Ltd. on September 14, 2012, and

served as a director of Sprint Nextel Corporation from August 2005 to May 2008 and as a

director of Nextel Communications, Inc. from August 1997 to August 2005.

Randall W. Crenshaw, Executive Vice President and COO: Randall Crenshaw became

CommScope's executive vice president and chief operating officer following the acquisition

by Carlyle. From January 1, 2010, to the acquisition, he was CommScope's executive vice

president and chief supply officer. Prior to this role, he was executive vice president and

general manager, enterprise since February 2004. From 2000 to 2004, he served as

executive vice president, procurement, and general manager, network products group of

the company. Prior to that time, he held various positions with CommScope company

since 1985.

Claudius (Bud) E. Watts IV, Director: Claudius Watts became a member of

CommScope's board of directors following the acquisition by Carlyle. He currently serves

as a managing director and head of the Technology Buyout Group of The Carlyle Group.

Prior to joining Carlyle in 2000, he was a managing director in the M&A group of First

Union Securities, Inc. He also serves on the board of directors of Freescale

Semiconductor and formerly SS&C Technologies, Inc. and has previously served on the

boards of directors of numerous other Carlyle portfolio companies over the past 13 years.

Campbell (Cam) R. Dyer, Director: Campbell Dyer became a member of CommScope's

board of directors following the acquisition by Carlyle. He currently serves as a managing

director in the Technology Buyout Group of The Carlyle Group, which he joined in 2002.

Prior to joining Carlyle, Mr. Dyer was an associate with the private equity firm William Blair

Capital Partners, a consultant with Bain & Company, and an investment banking analyst in

the M&A Group of Bowles Hollowell Conner & Co. He also serves on the board of

directors of SS&C Technologies, Inc.

Exhibit 33: The CommScope Management Team Has Lead the Company Through Numerous Transformative Events

Management Team Has Brought CommScope Through Multiple Transformative Events

1976 1980 1983 1986 1988 1990 1997 2004 2007 2011 2012 2013

CommScope founded

as independent

company

The Network Cable

division was

established

The CommScope division

transitions to CommScope

under the direction of Frank

Drendel

CommScope became a

public company (NYSE:

CTV)

CommScope completed

the acquisition of Andrew

Corporation

CommScope completed

the acquisition of

LiquidxStream and Argus

Technologies

CommScope became

part of the Cable Home

Group for M/A-COM

CommScope became

a division of General

Instrument

CommScope

acquired Avaya’s

Connectivity

Solutions business

The Carlyle Group

acquired

CommScope in

January

CommScope completed

the acquisition of

iTRACS and Redwood

Systems

Source: Company data, Credit Suisse research.

04 December 2013

CommScope (COMM) 29

Financial Statements Exhibit 34: CommScope Annual Income Statement in millions, unless otherwise stated.

In millions, except EPS FY 2011 FY 2012 FY 2013E FY 2014E

Total revenues 3,275 3,322 3,454 3,533

Y/Y % change 37.5% 1.4% 4.0% 2.3%

Cost of goods sold (non-GAAP) 2,445 2,261 2,260 2,311

Gross profit (non-GAAP) 830 1,061 1,194 1,221

Gross margin (non-GAAP) 25.4% 31.9% 34.6% 34.6%

SG&A (non-GAAP) 581 461 493 480

% of revenues 17.8% 13.9% 14.3% 13.6%

Research & development (non-GAAP) 118 122 131 127

% of revenues 3.6% 3.7% 3.8% 3.6%

EBITDA 463 571 670 683

EBITDA margins 14.1% 17.2% 19.4% 19.3%

Total operating expenses (non-GAAP) 450 560 580 592

Total operating expenses (GAAP) 1,019 822 862 790

% of revenues 13.8% 16.8% 16.8% 16.8%

Operating income (non-GAAP) 380 501 614 629

Operating margin (non-GAAP) 11.6% 15.1% 17.8% 17.8%

- -

- - - -

Pre-tax income (non-GAAP) 250 317 421 475

Pre-tax income (GAAP) (503) 37 67 257

Income tax expense (non-GAAP) 120 132 162 172

Non-GAAP income tax adjustment (230) (100) (89) (77)

Income tax expense (GAAP) (110) 32 73 94

Tax rate (non-GAAP) 47.8% 41.6% 38.5% 36.1%

Net income (non-GAAP) 131 185 259 303

Net margin (non-GAAP) 4.0% 5.6% 7.5% 8.6%

Non-GAAP EPS $0.84 $1.20 $1.61 $1.66

GAAP EPS ($2.53) $0.03 ($0.01) $0.89

Basic shares outstanding 155 155 163 183

Diluted shares outstanding 155 155 163 183


04 December 2013

CommScope (COMM) 30

Exhibit 35: CommScope Annual Balance Sheet in millions, unless otherwise stated.

FY 2011 FY 2012 FY 2013E FY 2014E

Cash and cash equivalents 317.1 264.4 199.3 227.6

Investments - - - -

Accounts and other receivables 581.8 596.1 616.3 630.2

Inventories, net 338.1 312.0 338.1 340.5

Prepaid Income taxes - - - -

Prepaid expenses and other

current assets 53.0 53.8 46.9 47.9

Deferred income taxes 77.4 61.1 56.6 56.6

Total current assets 1,367.3 1,287.3 1,257.3 1,302.7

- - - -

Property and equipment, net 407.6 355.2 326.3 307.5

Investments - - - -

Notes Receivable - - - -

Goodwill 1,483.9 1,473.9 1,458.3 1,458.3

Intangible assets, net 1,783.6 1,578.7 1,433.3 1,256.0

Deferred income taxes - - - -

Other assets 110.8 98.2 84.9 68.4

Total Assets 5,153.2 4,793.3 4,560.1 4,393.0

- - - -

Current liabilities: - - - -

Accounts payable 180.7 194.3 209.6 211.1

Accrued liabilities 320.6 344.5 316.2 303.1

Income taxes payable - - - -

Current portion of long term debt 12.3 10.8 0.6 0.6

Total current liabilities 513.7 549.6 526.4 514.8

- - - -

Deferred Income Taxes 492.7 429.3 399.3 384.0

Long term debt 2,550.7 2,460.0 2,398.0 2,127.5

Pension and postretirement

benefit liabilities 124.1 72.3 47.3 27.8

Other noncurrent liabilities 106.9 99.7 129.8 109.9

Total liabilities 3,788.1 3,611.0 3,500.9 3,164.0

- - - -

Stockholders' Equity: - - - -

Common stock 0.5 0.5 - -

Additional paid in capital 1,649.2 1,656.4 - -

Retained earnings (252.3) (447.7) - -

Accumulated other

comprehensive loss (26.4) (16.6) - -

Treasury stock, at cost (6.0) (10.3) - -

Total Stockholders' Equity 1,365.1 1,182.3 1,059.2 1,229.0

Total Liabilities and Equity 5,153.2 4,793.3 4,560.1 4,393.0


04 December 2013

CommScope (COMM) 31

Exhibit 36: CommScope Annual Cash Flow

FY 2011 FY 2012 FY 2013E FY 2014E

Net income / (loss) (392.325) 5.346 (5.982) 163.027

Non-cash adjustments - - - -

Depreciation and amortization 297.005 262.279 258.769 250.839

Amortization of discount on convertibles - - - -

Share-based compensation 30.382 7.525 16.429 15.280

Impairment of property and equipment 126.057 40.907 41.802 -

Impairment of other intangible assets - - - -

Deferred income taxes (174.536) (48.713) (20.127) (11.885)

Excess tax benefit from share-based compensation - - - -

Loss on conversion of debt securities 89.788 - - -

Other Reconciling items - - - -

- - - -

Changes to Working Capital 154.661 18.784 (60.983) (83.108)

Accounts and other receivables 63.502 (15.889) (21.325) (13.844)

Inventories 121.344 18.186 (28.039) (2.362)

Prepaid expenses and other assets 25.352 3.854 (14.415) 0.561

Accounts payable, accrued liabilities and other (50.833) 10.478 (11.753) (67.463)

Other (4.704) 2.155 14.548 -

Income taxes payable - - - -

Net Cash From Operating Activities 131.032 286.128 229.908 334.154

- - - -

Cash Flow from Investing Activities: - - - -

Net proceeds from sale of property and equipment 12.077 2.345 1.282 -

Additions to property and equipment (39.533) (27.957) (35.929) (35.329)

Purchases of investments - - - -

Maturities of investments - - - -

Investment in and loans to privately held company - - - -

Other (2.246) 2.301 2.900 -

Purchases of intangible assets - - - -

Cash disbursed for business acquisition (3,141.774) (12.214) (55.770) -

Proceeds from sale of product line - - - -

Net Cash From Investing Activities (3,171.476) (35.525) (87.517) (35.329)

- - - -

Cash Flows from Financing Activities: - - - -

Proceeds from issuance of long term debt 2,723.100 299.150 747.072 -

Repayment of long term debt (1,597.957) (394.356) (821.446) (270.535)

Long term financing cost (86.962) (2.701) (13.074) -

Proceeds from issuance of common stock 1,606.599 - 433.000 -

Tax benefits from share-based compensation - - - -

Repurchase of common stock - - - -

Tax withholding payments reimbursed - - - -

Dividends and other 10.496 (201.615) (550.137) -

Net Cash From Financing Activities 2,655.276 (299.522) (204.585) (270.535)

- - - -

Effect of Exchange Rate Change on Cash (3.759) (3.815) (2.863) -

- - - -

Net Change in Cash & Cash Equivalents (388.927) (52.734) (65.058) 28.290

Cash and Cash Equivalents, Beginning - 317.102 264.375 199.317

Cash and Cash Equivalents, Ending 317.087 264.469 199.317 227.607


04 December 2013

CommScope (COMM) 32

Companies Mentioned (Price as of 02-Dec-2013)

AT&T (T.N, $34.8) Alcatel-Lucent (ALUA.PA, €3.255) Amphenol Corporation (APH.N, $85.05) Anixter International (AXE.N, $88.73) China Mobile Limited (0941.HK, HK$83.9) China Telecom (0728.HK, HK$4.2) China Unicom Hong Kong Ltd (0762.HK, HK$12.32) Comba Telecom Systems Holdings Limited (2342.HK, HK$2.65) CommScope (COMM.OQ, $16.74, OUTPERFORM[V], TP $20.0) Ericsson (ERICb.ST, Skr81.15) Finisar Corporation (FNSR.OQ, $19.8) Motorola Solutions (MSI.N, $65.66) Nokia (NOK1V.HE, €5.89) Sprint Corp (S.N, $8.2) T-Mobile US Inc (TMUS.N, $26.49) Verizon Communications Inc (VZ.N, $49.26) Vodafone Group (VOD.L, 226.0p)

Disclosure Appendix

Important Global Disclosures

I, Kulbinder Garcha, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

As of December 10, 2012 Analysts’ stock rating are defined as follows:

Outperform (O) : The stock’s total return is expected to outperform the relevant benchmark*over the next 12 months.

Neutral (N) : The stock’s total return is expected to be in line with the relevant benchmark* over the next 12 months.

Underperform (U) : The stock’s total return is expected to underperform the relevant benchmark* over the next 12 months.

*Relevant benchmark by region: As of 10th December 2012, Japanese ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractiv e, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. As of 2nd October 2012 , U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American and n on-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12 -month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Prior to 10th December 2012, Japanese ratings were based on a stock’s total return relative to the average total return of the relevant country or regional benchmark.

Restricted (R) : In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V] : A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation:

Overweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months.

Market Weight : The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months.

Underweight : The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months.

*An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

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Credit Suisse's distribution of stock ratings (and banking clients) is:

Global Ratings Distribution

Rating Versus universe (%) Of which banking clients (%)

Outperform/Buy* 42% (54% banking clients)

Neutral/Hold* 41% (49% banking clients)

Underperform/Sell* 15% (40% banking clients)

Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, an d Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

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Price Target: (12 months) for CommScope (COMM.OQ)

Method: We use the average value calculated by three methods for our $20 target price: (1) 6.5x our 2014 estimated EV/EBITDA (comparing EV/EBITDA multiples with peers), (2) discounted cash flow (DCF) analysis using a 9.2 WACC, and (3) Credit Suisse HOLT analysis.

Risk: We see three risks to our Outperform rating on CommScope. If wireless capex spending and the LTE buildouts do not occur as expected, the company will likely not experience the growth that we currently forecast. Second, if the company's financial performance falls short of expectations, it will likely not have the funds from free cash flow to pay down a significant amount of debt. Third, while CommScope has the number one market share position in its Wireless business, we may be underestimating the competitive dynamics of the industry, which could hinder performance.

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names

The subject company (COMM.OQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse.

Credit Suisse provided investment banking services to the subject company (COMM.OQ) within the past 12 months.

Credit Suisse has managed or co-managed a public offering of securities for the subject company (COMM.OQ) within the past 12 months.

Credit Suisse has received investment banking related compensation from the subject company (COMM.OQ) within the past 12 months

Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (COMM.OQ) within the next 3 months.

As of the date of this report, Credit Suisse makes a market in the following subject companies (COMM.OQ).

Important Regional Disclosures

Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (COMM.OQ) within the past 12 months

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares.

Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report.

For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (COMM.OQ) within the past 3 years.

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CommScope (COMM) 34

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

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Important Credit Suisse HOLT Disclosures

With respect to the analysis in this report based on the Credit Suisse HOLT methodology, Credit Suisse certifies that (1) the views expressed in this report accurately reflect the Credit Suisse HOLT methodology and (2) no part of the Firm’s compensation was, is, or will be directly related to the specific views disclosed in this report.

The Credit Suisse HOLT methodology does not assign ratings to a security. It is an analytical tool that involves use of a set of proprietary quantitative algorithms and warranted value calculations, collectively called the Credit Suisse HOLT valuation model, that are consistently applied to all the companies included in its database. Third-party data (including consensus earnings estimates) are systematically translated into a number of default algorithms available in the Credit Suisse HOLT valuation model. The source financial statement, pricing, and earnings data provided by outside data vendors are subject to quality control and may also be adjusted to more closely measure the underlying economics of firm performance. The adjustments provide consistency when analyzing a single company across time, or analyzing multiple companies across industries or national borders. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes the baseline valuation for a security, and a user then may adjust the default variables to produce alternative scenarios, any of which could occur.

Additional information about the Credit Suisse HOLT methodology is available on request.

The Credit Suisse HOLT methodology does not assign a price target to a security. The default scenario that is produced by the Credit Suisse HOLT valuation model establishes a warranted price for a security, and as the third-party data are updated, the warranted price may also change. The default variable may also be adjusted to produce alternative warranted prices, any of which could occur.

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