European VoIP Summit 2017 // Edgewater // Panasonic // Siphon // Q Advisors

European VoIP Summit 2017 - London

#EVSLDN17

Copyright Cavell Group 2

Best Practices for Reducing Operational Cost, Customer Churn and Enhancing

Customer ExperienceSteve Pattison - CEO

#EVSLDN17

Operator Best PracticesReduce Operational Cost

Minimize Customer Churn

Enhance Customer Experience

4

EDGEWATER NETWORKS OVERVIEW

▪ Based in San Jose, CA▪ 14+ years experience scaling network services ▪ Market share leader in endpoint management

Network Edge Orchestration Powers Real Time Communications for Businesses and Service Providers

2XREVENUE GROWTH

2014-2016

500K+EDGES UNDER MANAGEMENT

20M+CONNECTED ENDPOINTS

#1MARKET SHARE

NORTH AMERICA#2 WORLDWIDE*

*IHS Technology Enterprise Session Border Controllers Market Tracker – Q3 2016 – < 800 Sessions

5

OPERATIONAL BEST PRACTICES

Awareness Consideration Purchase Service Loyalty

Contract to Cash

Revenueto Retention

Provisioningand Installation

First 30 DayCustomer Experience

ProactiveIssue Resolution

Contract Renewal

6

BEST PRACITICES OPPORTUNITIES

Customer Acquired

Customer Installation

Day 2+ Issues?

Customer Service Management

End of Contract

Renew or

Churn?

Issue Resolution

Process

Issue Resolved? Customer

Lost

Goal: Reduce Installation Intervals and Minimize OpEx

Goal: Quick and

Complete Resolution

Goal: Proactive Service Management

Goal: Minimize

Churn

Renew

Churn

No

No

Yes

Yes

7

BEST PRACTICES – PROVISIONING AND INSTALLATION

1. Choose solution components that are proven to interoperate (Phones, Routers, CPE, etc.)

2. Bundle components at distribution for dropshipment to customers

3. Ensure deployment model allows ‘flow through’ provisioning from OSS/BSS

4. Develop and standardize consistent configuration templates for each solution element

5. Minimize labor costs through Zero Touch Provisioning (ZTP)

“By implementing best practices with the right technology, we have been able to reduce our ‘contract to cash’ OpEx by 35%”

- Director, Comcast Business

8

BEST PRACTICES – FIRST 30 DAY CUSTOMER EXPERIENCE

1. Choose service control tools that provide access to all CPE and IP endpoints

2. Choose CPE and service control tools that can identify and isolate LAN issues from WAN issues

3. Set high service quality thresholds, monitor and report on every call

4. Use analytics and reporting to quickly see deviations from normal service quality

5. Put Tier 2/3 visualization tools in the hands of Tier 1 support agents for better customer communication

“Without visibility into the customer premises, my team would spend 5 to 10 hours a week trying to prove our network was not at fault. With visibility, we resolve issues in 30 minutes”

- Sr. Director Network Operations

9

BEST PRACTICES – PROACTIVE SERVICE MANAGEMENT

1. Know about service quality issues before your customer does

2. Choose a deployment method that allows for ‘Event Based’ triggering of service alerts

3. Set up ‘Event Triggers’ (e.g. low MOS, dropped SIP registrations, etc.) to capture intermittent service quality issues

4. Define specific actions to ‘Event Triggers’ to assist in troubleshoot and remediation

5. Use all tools at your disposal – packet captures on WAN and LAN interfaces, active line tests, TCP dumps, etc. – in an automated fashion

“If there are issues for even 30 seconds of an hour long call, we want to know about it. We measure the value of knowing and fixing in the number of crisis situations we avoid.”

- Sr. Director Customer Care

10

BEST PRACTICES – REDUCE END OF CONTRACT CHURN

1. Use reporting and service quality analytics to reinforce Service Level Agreements

2. Provide monthly reporting and service quality analytics to show below threshold events, call volumes and resolution times.

3. Use Proactive Service Quality management as a customer touch point to highlight commitment to quality

4. Use reporting and analytics to ‘right size’ customer bandwidth and call volumes

“Our contract renewal process starts the day we turn up the customer. We provide all of our customers with monthly service quality reports and use that as an opportunity to talk about our commitment to them.”

- Sr. Director Marketing


Benefit that matters

Raphael Studer – European Partner Account Manager SIP Product

#EVSLDN17

12

Benefit that matters!

European VoIP Summit

London

13

Raphael Studer

European Partner Account Manager

SIP Product Group

14

P roducts

SIP Line-up for

strong growth

S upport

From interop to

life cycle

E fficiencyLean operationcreates revenue

A dvantage

for Channel Partners

B enefit

Changeexperience

Panasonic has prepared a highly reliable

link for your business. A long tradition of

proven technology and a solid strategy

for future markets combined to offer new

and exciting business growth.

The answer's in here

1. Panasonic Introduction Products

SIP Line-up for strong growth!

16

FY2015New Products

Global Market – Extension Base

16

0

10

20

30

40

50

60

70

2013 2014 2015 2016 2017 2018 2019 2020

On-Premise Legacy PBX

On-Premise IP-PBX

Cloud Based IP-PBX

Carrier IP Phone (HPBX)

(Mil Extension) Extension (CAGR 101%)

58Mil Ext. 62Mil Ext

(Source MZA)

SIP

Device

Market

17

Panasonic Product Segmentation

1

7

+

+-

Enterprise

Cloud PBX

Market

Small / Medium

Cloud PBX

Market

Residential / SoHo

Cloud PBX

Market

-

+

Potential Volume

Reve

nu

e

Solution for

Project or

Mass sales

Vertical

Approach

Segment

overlap

18

Unique Performance

KX-TGP600

Base Unit

(TGP600)

Wireless Desk Phone(TPA65) requires no wiring for installation.Repeater for expanding coverage area

Remote configuration & handset managementTwo types of maintenance (Local or Provider)

Variety of Handsets Easy Setup and

Maintenance

Wireless Desk Phone(TPA65)

8 Simultaneous Calls x 8

HandsetsUp to 8 simultaneous calls, up to8 Handsets, up to 8 SIP accounts.For travel agencies, small retail stores, and other businesses with10 or fewer employees.

Single Cell SIP DECT – variation for everyone

Standard Handset(TPA60)

Tough Handset(UDT131)

Slim Handset (UDT121)

Repeater(A406)

19

Key Concept

KX-UDS124

Up to 8 clusters of 32 CS as a solution providing rooming for up to 255 HS

Remote configuration & handset management, no controller required,two types of maintenance (Local or Provider)

Enterprise segment

capability

Easy Setup and

Maintenance32 Cell Station providing

seamless hand-overUp to 4 simultaneous calls per CS, one master CS for entire management, over the air synchronizations for hand-over

Multi Cell SIP DECT – designed for cloud

Slim Handset (UDT121)

Tough Handset(UDT131)

Basic Handset (UDT111)

Base Station(UDS124)

20

Quality and Design

Highly rated Panasonic voice

quality, and a sharp/flat design

that embodies IP technology.

Leading Features

Complete line-up from price-oriented

entry terminal to high-end video

terminal.

Priced to make every model

competitive with other-brand

models.

From Entry to Video Highly Competitive Prices

KX-HDV Series

HDV130

SIP Corded Phone – device for every demand

HDV230 HDV330

HDV430

Visual Communication

21

Comparison of Video Quality

Original Subject

Comparison of Automatic White Balance Performance in Changing

Illumination

The automatic white balance in the Panasonic

KX-HDV430 has stable color reproduction

without being affected by the room's illumination.

Efficiency

From interop to life cycle

23

Broadsoft (BroadWorks / BroadCloud*)

Teles AG (C5 System)

Centile (Istra System**)

Sipwise (LGI Group)

Metaswitch (MetaSphere)

Open source as Nfon, Blueface, Altos, etc.

* BroadCloud ready as per E/March 2017

** Certificate of TGP only at the moment

Soft switch compliance – basic condition!

24

From interop test to life cycle management

25

Cost savings from the beginning!

Auto provisioning as one option for “Zero Touch” business

Panasonic global

redirection server

checks carrier

Device requests

account credentials

Carriers provisioning

server releases

credentials

Panasonic reroutes to

carrier server based

on MAC address

Carrier Server

deploys Account Data

Device stores account

information for operation

Pre-installed URL

leads to Panasonic

redirection server

1

2

3

4

5

6

7

26

Advantages

For channel partners!

27

Panasonic support for more business

End User

Service Provider

Terminal

Sales

Service Fee

Air Time

Brand

Awareness

Panasonic supports channel sales

Partner

Certification

+ Integration

New business

from cloud services

Panasonic keeps

channel sales model

Painless on Integration

and operation

Reliable Partner to

Channel + Carrier

Recurring commissions

on hosted service

HW Margin

Service

Commission

28

New HWaaS Business Model

Hardware as a Service (HWaaS) your new OPEX Business Model

Introduction in Q2 2017 with prior to UK/IRL, DACH, BNLX

Benefits

That will change experience!

30

FY2015New Products

End Customer

Partner

Carrier

✓ Competitive value

proposition

✓ Attractive for any

segment

✓ Support channel

sales

✓ Flexible

Distribution

✓ Contribution to

carrier strategy

✓ Long term

technology partner

31

FY2015New Products

Thank you!


Will Voice over IP become Video over IP?

Ed House – Sales Director of Video

#EVSLDN17

Will Voice over IP become Video over IP?

Introduction to Video - Ed House

SIPHON strives to be the leading Unified Communications Technology Enabler in Europe by

helping our Customers succeed in delivering Innovative, Profitable and High Quality services.

Awards and Accreditations

Industry Leading Vendor Partnerships

Customer Success Stories High Growth & Established Leaders

• Established in 2009

• Deloitte Fast Track50 UK &

Fast500 EMEA Winner 2015 &

2016

• Sole Focus on Cloud & UC

Technology Enablement via

Partners

• >50% of staff are hands on and

accredited engineers

• Became part of the Nuvias

group in 2016 as Unified

Communications practice

Company Vision & Background

Why are we here today?

• What is the opportunity for me to offer Video services and why should I?

• What are the various options for launching Video?

• Cloud, Premise based, Hybrid?

• How do I start to plan and develop my service, platform and proposition?

• Who are the main players in the market today and how can I partner or compete with them?

• How do I enable and support my video service when ready?

• What can SIPHON do to help me?

UCaaS today is Voice and IM centric and is moving to full Collaboration

• Voice and Video traditionally separated but now being seen as one in terms of User Experience and Interface. SKYPE showed potential but also demonstrated issues in delivering successfully (user frustration even when free)

• Traditional Integration between the two services was very disjointed with vendors taking different approaches. Starting to move to more integrated offering.

• Video and Collaboration players moving into Voice and Voice players adding Video services as logical extension to portfolio

Video Adoption

• Video no longer a ‘nice to have’ for companies, but a necessity.

• Skype & Facetime driving video adoption

• The future work force and next generation – Facebook live & Youtube / on demand

Who are the main Players – Group Video, Web Conferencing and UCaaS

Why should I offer Video services?

Internet Service Provider Cloud Telephony Provider Systems Integrator/Reseller

• Video services as a start to

UCaaS portfolio offering

• Need to offer converged

services versus competition

• Drive increased bandwidth

use and associated

connectivity revenues

• Video services to further

complement existing Voice

led service



• Increase ARPU and

Recurring Revenues to drive

EBITDA & valuation

• Video technology drives

extended requirement for

professional services



• Ability to offer service with

combination of equipment resale

and recurring revenue

Components of a Video Service Offering

End Points / Clients Room Systems Core Network

• Individual users will require

both point to point

communication and ability to

enter multi party calls

• Needs to integrate with

Room system and share

collaboration content

• Support Desk Phone, PC

Client and Mobile Clients

• Enable multi site and multi

party video calling

• Enable extension of

communication to include

collaboration

• Be easy to deploy, integrate

and support

• Cost Effective

• Seamless working with Rooms

and Users with single user

experience

• Support for multi vendor systems

plus various deployment

scenarios

• Multi level user/reseller portal to

enable effective management

and scheduling

Where do I start – I have my own Call Control and existing Voice offering?

• Can I re-use my existing platform and integrate video to my service?

• What level of integration is available?

• What additional investment do I need to make in Cloud infrastructure?

• How do I deploy, manage & support the various end points

• Do my current soft clients and voice related CPE work together with the video end points as a unified service?

Voice Video

UC Cloud Platform Providers

What is the market opportunity for adding Video services?

• Video conferencing market set to reach $2.9 billion by 2022

• Video Conferencing Services Market to see 19.6% CAGR to 2022

• Healthcare, Education and Government as key growth verticals

• New SME and mid-market opportunity with desktop and cost effective room systems and SaaS pricing

• £20 / month per VMR

Thank you

Any Questions?


Cloud Communications Success Stories from around Europe

#EVSLDN17


Cloud Communication success stories from around Europe

Xavi Casajoana – CEO & Owner, Voztelecom

Rami Houbby – MD, NFON

Kevin Scott-Cowell – UK MD, 8x8

Matthew Townend – Director, Cavell


Market Experiences

• Simple Bundled propositions have prevailed

• Marketing and Channel expertise has been key to success

• Traditionally competed with PBX based on Opex, but now more competition between offerings

• Providers have differentiated by:

• Global/International Focus

• Vertical Business Process Integration

• Integration to common business tools (Microsoft, CRM etc)

• Focus on specific features/capabilities: Recording, Inbound/Contact Centre, Continuity & Security, Collaboration


Cloud Communication success stories from around Europe

Xavi Casajoana – CEO & Owner, Voztelecom

Rami Houbby – MD, NFON

Kevin Scott-Cowell – UK MD, 8x8

Matthew Townend – Director, Cavell


#EVSLDN17

Break – Return at 3pm

Room 1: What role will developers play in the future of communication?

Room 2: ’Running to where the ball is going to be’ - A discussion on M&A strategies

Room 3: The General Data protection regulation: How to prepare


‘Running to where the Ball is going to be’ – A Discussion on M&A Strategies in the Cloud Space

#EVSLDN17


“Running to where the ball is going to be” – A discussion on M&A strategies in the Cloud space

Michael Quinn – Founding Partner, Q Advisors

Alan Foy – CEO, Blueface

© Copyright 2017 Q Advisors LLC · All Rights Reserved. | WWW.QLLC.COM

Member FINRA | SIPC

CLOUD M&A – RUNNING TO WHERE THE BALL IS GOINGQ Advisors Presentation to the European VoIP Summit

March 2017

52

Q Advisors Overview

• Founded in 2001 to provide financial advisory services

• Focused primarily on Communications, Technology and Media

• Most active UCaaS and managed services investment bank in the industry, based on the number of active clients and deals closed

• Significant experience in structuring and negotiating M&A and financing transactions for private and public companies:

Sell-side and buy-side engagements

Debt and equity financings

Strategic financial advisory engagements

Global reach and capabilities

• Closed over 200 transactions since inception

Total transaction value of approximately $9.0 billion

Global reach and capabilities

Q1 will see over $2.0 billion in additional transaction value consummated

• Offices in Denver, CO and San Francisco, CA

• Team of 17 professionals

• Major-bracket experience coupled with boutique attention

Firm Profile TMT Experts

Cloud Contact Center Solutions

Unified Communications-as-a-Service (“UCaaS”) / Managed Services

Managed SecurityManaged Network and Infrastructure

Digital Media / Ad Tech

Mobility Services & Applications

Internet of Things (“IoT”)

Collaboration / Conferencing

53

Select Q Advisors Cloud Transactions

ACQUIRED BY

sell-side advisor

ACQUIRED

buy-side advisor

ACQUIRED BY

sell-side advisor

ACQUIRED

buy-side advisor

ACQUIRED

buy-side advisor

EQUITY FINANCING BY

placement agent

DEBT FINANCING BY

placement agent

ACQUIRED BY

sell-side advisor

ACQUIRED BY

sell-side advisor

ACQUIRED BY

sell-side advisor

54

Valuation Optimization: Getting into Position

Move up the Services Stack

Accelerate Geographic Expansion

More Tools in Toolbox

Expand Partnerships via

APIs / Integration

Achieve Scale (Organic / Inorganic)

“There’s only one moment in which you can arrive in time. If you’re not there, you’re either too early or too late”

- Johan Cruyff

Ability to differentiate and capture enterprise market share will be key to optimizing value going forward

Vertical Expertise

55

Rapidly Expanding Cloud Market Opportunity

CLOUD MANAGED SERVICES OPPORTUNITY1

VOICE AND COLLABORATION

MANAGED NETWORK MANAGED SECURITY

CLOUD CONTACT CENTER

IAAS

BUSINESS PRODUCTIVITY APPLICATIONS (CRM, ERP, ETC.)

CPAAS

WEBRTC

Cloud Managed Services represents an expanding market, spanning several cloud solutions beyond traditional voice and connectivity. This new opportunity is fueling technology M&A and investment activity

OBSERVATIONS

MARKETOPPORTUNITY

$200+ B(2020)

$50.8 BCAGR 11%

$9.0 BCAGR 20%

$4.5 BCAGR 51%

$8.0 BCAGR 156%

$20.0 BCAGR 30+%

$15.0 BCAGR 26%

$56.1 BCAGR 20%

$50.8 BCAGR 18%

CLOUD COMMUNICATIONS APPLICATIONS

CLOUD MARKETPLACE EXPANSION

CLOUD INFRASTRUCTURE

CLOUD PRODUCTIVITY APPLICATIONS

MANAGED SECURITY

MANAGED IT

DEMAND FOR SINGLE SOURCE SOLUTION

SINGLE UI, UX AND POINT OF CONTACT

PRIMARY COMMUNICATIONS PROVIDERS

HAVE LEG UP

OPPORTUNITY FOR TRADITIONAL TELECOM

COST SAVINGS STILL BIG VALUE DRIVER

MANAGED IT$731.0B2

(2) Managed IT market alone equates to $730B+; not included in aggregated opportunity above due to overlap of select segments (e.g.. managed security)

(1) Sources: Frost and Sullivan, IDC< Market and Markets, Strategic Analytics

56

M&A Activity: Transformative Strategic Acquisitions

Cloud Managed Services segment expected to see continued deal volume in 2017 and beyond, driven by highly disruptive cloud technologies and non-traditional players making inroads in the space

Buyer Target Notes Who’s Next

• Hosting provider, GoDaddy, purchased proprietary UCaaS provider, FreedomVoice to enter into growing cloud services space

• KPN acquired IS Group and RoutIT to accelerate growth in managed IT and cloud services

• Nuvias acquired Siphon to accelerate the integrator’s expansion in Europe

• Enhances Nuvias’ cloud product capabilities

• Arkadin has acquired several collaboration providers to expand strategic customer base

• Recently acquired implement.com and Applicable to expand Skype4Bcapabilities in U.S. and Europe

Non-traditional players expansion into cloud

managed services

Traditional Telecom further expansion into Cloud and Managed IT

Acquire new distribution model and

cloud product capabilities

Enhancement of core product capabilities

57

M&A Activity: Transformative Strategic Acquisitions (cont’d)

Cloud Managed Services segment expected to see continued deal volume in 2017 and beyond, driven by highly disruptive cloud technologies and non-traditional players making inroads in the space

Buyer Target Notes Who’s Next

• West acquired proprietary platforms, Smoothstone and Magnetic North to add product capabilities to core solution

• Broadsoft acquired Transera to enhance its contact center platform capabilities and address product gap

• NTT purchased Arkadin, Virtela and recently Dell Services to expand market presence and address enterprise needs along cloud stack

• Vonage recently purchased Nexmo to leverage CPaaS solution alongside core UCaaS platform to better serve mid-to-large enterprise segment

Acquisition of proprietary cloud

platform

Acquisition of cloud contact center platform

to fill product gap

Expansion of market presence to new

geographic region / country

Acquire adjacent, innovative capabilities

such as CPaaS platforms

58

Investment Activity: Increased Interest from Private Equity

Private equity continues to circle the cloud managed services space, driven by several market rollup opportunities, preference for recurring revenue streams and “as-a-service” models

Partner Platform Investment Notes

• Cloud infrastructure and managed services provider uniquely serving mid-tier enterprise segment

• Investment to fund global acquisition strategy targeting cloud providers

• Masergy positioned as leading managednetwork provider with global capabilities

• Demonstrated ability to move up and across cloud managed services stack

• Attractive positioning in high growth managed security segment

• End-to-end managed security solution with increasing transition to MRR model

• Highly unique solution relevant to several cloud providers

• Current positioning as unique player in the rapidly growing cloud market

Proven cloud infrastructure platforms

with data privacy and security

Attractive positioning in high growth managed

security segment

Managed network providers with proven ability to move up the

cloud stack

Highly differentiated platforms riding wave

of cloud growth

59

M&A and Investment Activity Outlook

Telecom and Technology sectors expected to see the most deals in 2017 and beyond, driven by highly disruptive cloud technologies such as cloud voice, unified communications and applications

Corporate Buyers Seeking Transformative Acquisitions

Heightened Activity from Private Equity Community

Traditional Telcos Continue to Augment Existing Solution through M&A

Macro Factors Fueling Activity

• Enter new line of business

• Acquire new geographic region/country

• Acquire core technology platform or solution

• Acquire mid-to-large enterprise customer base

• U.S. buyers taking advantage of strong U.S. dollar

• Preference for contracted, recurring revenue model

• Will fund transformation of legacy revenue / customer base to cloud recurring model

• Larger PE firms looking for proprietary cloud roll-up opportunities globally

• “Second wave" of M&A activity as private equity players look to bulk up newly acquired platforms

• Renewed effort to attract SMBs and enterprises through upsell of cloud-based managed services

• Proprietary technology often favored as core platform to build cloud and collaboration portfolio

• Bolt-on acquisitions for cloud product, customer base and/or expanded geographic reach

• Buyers leveraging strong balance sheets, access to capital and slow but steady economic growth

• Foreign buyers driven to select U.S. markets and vice versa in select markets in Western Europe and Scandinavia

• Cash-rich consolidators

Source: (1) M&A Outlook Survey, KPMG

60

EU & U.S. Deals Other Cross Border Deals

M&A Outlook: Accelerated Cross Border Activity

U.S. Buyers Fueling Transactions1

U.S. and EU Most Active Relationship1

• Global, cross-border M&A market is set for future deals with technology deals generating highest value among sectors1

U.S. Outbound M&A Other Regions Outbound M&A

41% U.S. Buyers

67% EU / U.S.

Deals

Strategic acquirers are paying a premium for expansion outside of domestic markets

Representative Transactions

Source: (1) Baker & Mckenzie

Acquirer Location Target Location Valuation

Nuvias Group U.K. Siphon Networks U.K. N/A

Arkadin France Applicable U.K. N/A

NTT Tokyo Dell Services U.S. N/A

Arkadin France AT Conference U.S. 1.0x LTM Rev

Broadsoft U.S. PBXL Tokyo N/A

West U.S. Magnetic North U.K. 3.7x LTM

8x8 U.S. DXI Limited U.K. 2.1x LTM Rev

Enghouse Canada Reitek Italy N/A

NTT Tokyo Arkadin France 2.6x LTM Rev

NTT Tokyo Virtela U.S. 4.0x LTM Rev

U.S. and Europe most active cross border relationship with U.S. buyers paying a premium for expansion into European markets

61

Valuation Update: Cloud Public Trading Comparables

TEV / LTM Revenue - LTM

0.0x

1.0x

2.0x

3.0x

4.0x

5.0x

6.0x

Reven

ue M

ult

iple

Relative Trading Performance - LTM

-40.00%

-20.00%

0.00%

20.00%

40.00%

60.00%

80.00%

100.00%

• Proprietary pure play cloud managed service platforms including 8x8, Broadsoft, and RingCentral continue to trade at a premium relative to peers

• Players higher up the managed services stack (i.e. 8x8, Broadsoft, Ringcentral) trade at a premium to players operating further down in the stack (i.e. GTT)

• Proven ability to move up the services stack has attributed to GTT’s increase in relative performance

• Both West and 8x8 have hired investment banks to explore strategic opportunities (i.e. sell)

Observations

62

What’s Driving Cloud Managed Services Valuations?

What specific company characteristics are driving valuation across Europe?

Proprietary Solution

Beyond Standard UCaaS

Scalable Globally

Cloud Contact Center

Security / Data Protection

Robust Capabilities

Multi-lingual

Multi-currency

Multi-tenant

Customization (APIs)

Multi-regional tax

Diversified Customer Base

Pan regional

Mid-to-large enterprise

Multinationals

Low churn

Strong Sales Channels

Key European MSAs

White Label Partnerships

Direct sales presence in primary markets

Quality of Service

Key Telecom Licenses

Data Protection Guarantees

Automated Platforms

SLAs

European Specific Valuation Drivers

Specialization

Geographic presence in key developed markets (i.e. UK)

Ability to offer hybrid solutions

Vertical Expertise

Global Valuation Drivers

Technology / Solution

Robust Capabilities

Diversified Customer Base

Strong Sales Channels

Quality of Service

Specialization

63

Ability to “Move up the Stack” is Key to Success in the Cloud

Profile➢ Employees (1,000+)➢ MRR (>$5,000)➢ Multi-location offices / employees

Profile➢ Employees (100-999)➢ MRR (>$1,000)

Profile➢ Employees (<100)➢ MRR (<$1,000)

Managed Cloud Infrastructure

Managed Cloud Network

Managed Cloud Software / Applications

Services➢ Cloud Voice & UC➢ Cloud Contact Center➢ Conferencing and Collaboration➢ Productivity & Vertical Apps➢ Mobility

Services➢ IaaS➢ PaaS / Middleware➢ Cloud Storage ➢ Colocation

➢ Ability to move up the Target Market stack from SMB to mid-to-large enterprise will increase ARPU and reduce churn

➢ Ability to address needs higher up the cloud services stack is key to increased wallet share and creating a differentiated solution

Mid-to-Large Enterprise

SOHO / SMB

Large Enterprise

Services➢ Cloud Networking➢ MPLS/VPN➢ Network Monitoring

Opportunity to address cloud needs higher up the cloud services and SMB / Enterprise stack to capture greater wallet share and recurring revenue streams

Managed Cloud Services Stack Target Market SMB / Enterprise Stack

64

Representative Players “Moving up the Stack” in Product Capabilities

Several Providers traditionally operating in the managed network and infrastructure segments are moving up the cloud services stack in terms of product capabilities and service offerings

Strategy Examples

Traditionally Cloud

Infrastructure Providers

Traditionally Managed Network Providers

Amazon ChimeLeverage AWS

Google Apps for WorkLeverage GCS

Skype for BusinessLeverage Azure / Office365

BT One SolutionPartnership with Cisco and

various cloud providers

UC StrategySeeking acquisitions to

enhance cloud technology

Easynet acquisitionAcquisition of Easynet

provided range of UC apps

UCaaS / Managed SecurityAcquisitions: Broadcoreand Global DataGuard

Collab / Managed SecurityAcquisitions: Arkadin and

Solutionary

UCaaS / Managed ITAcquisitions: Telnes

Broadband and One Source Networks

Leverage existing enterprise managed network solutions to

upsell cloud applications

Leverage cloud infrastructure

enterprise solutions to upsell cloud applications

65

How to Differentiate When Targeting the Enterprise

Proven Ability to Move Up the Services Stack1

Plenty of “Tools in the Toolbox”2

Geographic Diversification3

Demonstrated Vertical Expertise4

Proven Role as Trusted Advisor5

Ability to Achieve Scale6

66

Differentiating Cloud Capabilities: 2017 & Beyond

$242.0BMarket

Description: Outsourced monitoring, management and problem resolution of a company’s IT infrastructure

Growth Driver: Growing demand for outsourced IT departments where provider acts as single source, trusted advisor

Managed IT

$33.7BMarket

Description: Outsourced security monitoring across a Company’s network, infrastructure and applications

Growth Driver: Increased high-profile cybersecurity attacks and growing demand for security offered as fully managed service

Managed Security

$6.0BMarket

Description: Software defined networking for WANs; simplifies the management and operation of networks, ensuring QoS

Growth Driver: Increasingly used to provision cloud services OTT while ensuring QoS, compliance and security

Enhanced Managed Network

$4.9BMarket

Description: Lifecycle management or TEM platforms that track, automate and monitor cloud infrastructure and networks

Growth Driver: Increasing complexity of networks and ability to achieve significant efficiencies and cost savings through automation

Communications Lifecycle Management

$18.0BMarket

Description: Expanding beyond domestic market to serve multinational organizations

Growth: Europe is made up of several high growth, underpenetrated markets

Ability to operate in key European markets such as U.K., the Netherlands and Germany

Geographic Expansion

$8.1BMarket

Description: Cloud based platforms that allow enterprises to customize and embed communications features via APIs

Growth Drivers: Demand for customization and real time communications capabilities from mid-to-large enterprises

CPaaS / Advanced API Capabilities

CAGR: 10.8%

CAGR: 13.5%

CAGR: 14.6%

CAGR: 65.1%

CAGR:156% CAGR:29.1%

Source: IDC

Source: Markets and Markets, US Commission on Enhancing National CybersecuritySource: Markets and Markets

Source: Markets and Markets

Source: Frost and Sullivan, IDC, Market and Markets, Source: Frost and Sullivan, Cavell Group

67

Has the Cloud Won Yet?

Cloud has not won the enterprise yet, but it is winning, especially in light of Avaya’s recent

chapter 11 filing

Market Implications

(1) Represents land grab for all UC participants, especially cloud providers

(2) Pure OTT players (i.e. RNG) targeting enterprises will be like going to war with a bow and arrow. These players lack the requisite network and security capabilities to serve mid-to-large enterprises

(3) Enterprises not comfortable shifting 100% of IT operations to the cloud

(4) Ability to offer a hybrid solution will be key to getting foot in the door as enterprises gradually warm to cloud

(5) Positive impact on overall valuation of cloud service providers. Serves as validation of cloud’s future role in the enterprise telephony and UC market

68

New Entrants and Impact on Market

[Will large cloud technology providers (i.e. Amazon, Google) “move up the stack” as Microsoft has done?

These players all appear to be targeting an integrated enterprise cloud offering

New Entrant Product(s) Observations

• OpenTouch Office Cloud is a UCaaS offering targeting the enterprise primarily through the channel

• Rainbow offering is a CPaaS add-on to enable development and customization of collaboration apps

• Amazon’s Chime service is a WebRTC UCaaS offering stemming from the acquisition of Biba last year

• Coupled with the AWS offering, Amazon is moving upmarket with its solution to the enterprise

• Recently partnered with a handful of UCaaS players, such as Vonage

• Recent merger of LogMeIn and Citrix’s Go-To business

• Creates $1B+ provider of Collaboration (Go-To family), UCaaS (Grasshopper), and customer engagement and security applications (LogMeIn products)

• Skype for Business launch with PSTN capabilities

• Coupled with native Office365 and Azure offering

• Relies heavily on partners for telephony services

• ReadyTalk acquired by PGi

• PGi has a rival service called TalkPoint

• Seamless integration into PGi’s partner and carrier strategy

• Invaluable asset to PGi to grow their SaaS and UC portfolio of products

69

Most Active Cloud Strategic Sectors

Par

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rin

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Carriers

Acq

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Hardware / IT Solution Providers

70

Next Wave of Consolidators

Cloud Infrastructure Players SaaS Vendors

Hosting Providers Value Added Resellers

• Next consolidators include several relatively new entrants to the market: Amazon Google Microsoft GoDaddy

• New entrants likely to take buy vs. build approach (i.e. buying one of the pure plays in the space)

• 8x8 is currently in market; in addition to the usual suspects (e.g. telecom providers), several new entrants are viable acquirers Amazon Salesforce Google

Observations:

71

Most Active Private Equity Players

Existing Platform Investment Actively seeking:

• Most open to both minority and majority equity positions

• Bolt-on of technology solutions for existing portfolio companies

• Platform for rollup opportunities across U.S. and EU

• Integration along cloud services stack

• Transition legacy revenue streams to cloud based model

Seeking Platform Investments

72

Valuation Optimization: Getting into Position

Move up the Services Stack

Accelerate Geographic Expansion

More Tools in Toolbox

Expand Partnerships via

APIs / Integration

Achieve Scale (Organic / Inorganic)

“There’s only one moment in which you can arrive in time. If you’re not there, you’re either too early or too late”

- Johan Cruyff

Ability to differentiate and capture enterprise market share will be key to optimizing value going forward

Vertical Expertise

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CLOUD M&A – RUNNING TO WHERE THE BALL IS GOINGQ Advisors Presentation to the European VoIP Summit

March 2017


“Running to where the ball is going to be” – A discussion on M&A strategies in the Cloud space

Michael Quinn – Founding Partner, Q Advisors

Alan Foy – CEO, Blueface


BREAK

Room 1: Future of Communications

#EVSLDN17

www.cavellgroup.com

@CavellGroup

www.thevoiceofvoip.co.uk

01206 381544

Thank you