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1 ® Adtran, Inc. 2011 All rights reserved
Candidate Employee Briefing
Munich
January 10, 2012
Jay Wilson
Senior Vice President & General Manager
ADTRAN, Inc., Carrier Networks Division
2 ® Adtran, Inc. 2011 All rights reserved
Broadband Access Solutions – #1 in MSAN port shipments in the U.S. – Top 5 in MSAN port shipments globally – #1 in Broadband DSL in the U.S. – Top 4 in Broadband DSL globally – #1 in sealed Fiber-to-the-Node
Mobility Infrastructure – #1 in Mobile Backhaul connections in North
America
Enterprise Solutions – Top 2 in Branch Office Routers in the U.S. – #1 in VoIP access & SIP Trunking in the
U.S. – #1 in IP Business Gateways in the U.S.
ADTRAN at a Glance
Innovative Solutions – Broad portfolio > 1,700 products – Fixed Broadband, Optical &
Enterprise Networking
Strong Financials (Nasdaq: ADTN)
– 2010 revenue - $606M USD – 2010 R&D investment - $90.3M – Over 20 years of continuous
profitability
Expanding Global Presence – Headquartered in Huntsville, AL – Development centers:
Phoenix, AZ Ottawa, Canada Mountain View, CA Hyderabad, India Boston, MA
ADTRAN Headquarters, Huntsville, AL
NASDAQ: ADTN
ADTRAN & NSN Proprietary & Confidential
3 ® Adtran, Inc. 2011 All rights reserved ADTRAN & NSN Proprietary & Confidential
All names and logos on this slide are properties of the respective owners
Global Customers, Resellers, Distributors
4 ® Adtran, Inc. 2011 All rights reserved
2006 2007 2008 2009 2010
$473 $477
$501 $484
$606 Revenue: 2006-2010 ($ millions)
Annual Revenue and EPS
2006 2007 2008 2009 2010
$1.04
$1.10
$1.22
$1.17
$1.78
EPS: 2006-2010
ADTRAN & NSN Proprietary & Confidential
5 ® Adtran, Inc. 2011 All rights reserved
Global Growth Trends Are Driving
Need for Fixed Access Infrastructure
Global Market Growth Trends
Broadband Connectivity – Exponential growth in bandwidth demand
Driving CapEx spending
– IP traffic will increase 4x over next five years1
Mobility – Mobile data demand growing 15-25x over next
three years2
– Users have growing number of end-points Smartphone, iPad, laptop, machine-to-machine
Cloud Virtualization – Shift to cloud computing drives demand for last-mile
connectivity Carrier Ethernet, Broadband
EU Broadband Initiatives – Numerous BB and fiber programs throughout Europe
Finland and Switzerland “fiber close to the subscriber” Italy has strong government funding for BB covering copper and fiber
1
Infonetics 2 FCC
6 ® Adtran, Inc. 2011 All rights reserved
Planned Acquisition of NSN’s BBA Business
ADTRAN to acquire Nokia Siemens Networks Broadband Access (BBA) business in entirety
Legal setup based in Germany; entities established in all other strategic countries
NSN BBA business includes
– DSLAM, MSAN, GPON and related Network Management and IPR
– Incumbent customer base of Tier 1 carriers in Europe, Middle East, Africa, India, Russia and Asia
– Strong team of sales, service, engineering and R&D
Acquisition is anticipated to close in the first half of 2012
Establishes ADTRAN as a Top Tier Global Supplier in fixed broadband access with a strong regional diversity of customers
ADTRAN & NSN Proprietary & Confidential
7 ® Adtran, Inc. 2011 All rights reserved
Global Market Position
Today, the vast majority of ADTRAN’s revenue is NA Based—90%
– NA is two countries with the lowest total population of all world regions
– Highest GDP in world
– Highest GDP/capita in the world
NSN BBA has strong market position and knowledge in global market
– Particularly strong in Europe and growing presence in Middle East/Africa
– Understand many of the country specific rules and regulatory requirements
– Understand the unique economic or political challenges
5 ADTRAN Company Confidential
Combination of ADTRAN and NSN provides unique opportunity to build a
sustainable business across the two largest markets (North America and
Europe) and increase global penetration
8 ® Adtran, Inc. 2007 All rights reserved
Geographic Breakdown
Asia Pacific—includes Australia & Pacific Islands
Europe—includes Russia, Greenland, CIS States
Middle East and Africa (MEA)—includes Iran,
Pakistan & Afghanistan
North America—US and Canada only
Caribbean & Latin America (CALA)—includes Mexico
and Central America
9 ® Adtran, Inc. 2007 All rights reserved
World Facts
Today, the vast majority of ADTRAN’s revenue is U.S. Based—90%+ – NA is two countries with the lowest total population of all world regions
– Highest GDP in world
– Highest GDP/capita in the world
NSN has strong market position and knowledge in global market – Particularly strong in Europe and growing presence in Middle East/Africa
– Understand many of the country specific rules and regulatory requirements
– Understand the unique economic or political challenges
Combination of ADTRAN and NSN provides unique opportunity to build a sustainable business across the two largest markets in the world (North America and Europe)
Region Countries by
Region Total Population
Percentage of
Global
Population
Total GDP (USD) Percentage of Global GDP
Average GDP
per Capita
(USD)
World 195 6,700,000,000 100% $58,288,797,050,000 100% $ 8,700
North America 2 340,000,000 5% $15,596,000,000,000 27% $45,871
Latin America 32 480,000,000 7% $ 4,188,892,500,000 7% $ 8,727
Europe 50 830,000,000 12% $19,761,344,000,000 34% $23,809
Asia Pacific 42 4,021,000,000 60% $15,453,346,550,000 27% $ 3,843
Middle East & Africa 69 1,100,000,000 16% $ 3,289,214,000,000 6% $ 2,990
10 ® Adtran, Inc. 2007 All rights reserved
ADTRAN Revenue Map
11 ® Adtran, Inc. 2011 All rights reserved
ADTRAN in Top 50 Globally
1 AT&T 26 STC
2 NTT 27 Chunghwa Telecom
3 Verizon 28 BSNL
4 Deutsche Telekom 29 Softbank Telecom
5 Telefonica 30 Etisalat
6 France Telecom 31 Windstream Communications
7 British Telecom 32 Portugal Telecom
8 China Telecom 33 TDC
9 America Movil (Telmex) 34 Cable & Wireless World Wide
10 Telecom Italia 35 Telenor
11 Telemar wireline 36 Telkom Indonesia
12 Telstra 37 Bharti
13 CenturyLink 38 MTS
14 Bell Canada 39 GVT
15 China Unicom 40 Telecom Egypt
16 Korea Telecom 41 Bezeq
17 KDDI 42 CANTV wireline
18 Rostelecom (Part of Svyazinvest) 43 Cable & Wireless Communications
19 Swisscom 44 Telecom Argentina
20 KPN Telecom 45 Maroc Telecom
21 SingTel 46 Qtel
22 EMBRATEL (part of America Movil) 47 TIM Brasil
23 Turk Telecom 48 Telekom Austria
24 TeliaSonera 49 MTNL
25 Telus 50 Entel (Chile)Source: Ovum 2Q '11 Global Fixed Telecom Ranking by Revenue
ADTRAN & NSN Proprietary & Confidential
12 ® Adtran, Inc. 2007 All rights reserved
NSN Revenue Map
13 ® Adtran, Inc. 2011 All rights reserved
NSN-BBA in Top 50 Globally
1 AT&T 26 STC
2 NTT 27 Chunghwa Telecom
3 Verizon 28 BSNL
4 Deutsche Telekom 29 Softbank Telecom
5 Telefonica 30 Etisalat
6 France Telecom 31 Windstream Communications
7 British Telecom 32 Portugal Telecom
8 China Telecom 33 TDC
9 America Movil (Telmex) 34 Cable & Wireless World Wide
10 Telecom Italia 35 Telenor
11 Telemar wireline 36 Telkom Indonesia
12 Telstra 37 Bharti
13 CenturyLink 38 MTS
14 Bell Canada 39 GVT
15 China Unicom 40 Telecom Egypt
16 Korea Telecom 41 Bezeq
17 KDDI 42 CANTV wireline
18 Rostelecom (Part of Svyazinvest) 43 Cable & Wireless Communications
19 Swisscom 44 Telecom Argentina
20 KPN Telecom 45 Maroc Telecom
21 SingTel 46 Qtel
22 EMBRATEL (part of America Movil) 47 TIM Brasil
23 Turk Telecom 48 Telekom Austria
24 TeliaSonera 49 MTNL
25 Telus 50 Entel (Chile)Source: Ovum 2Q '11 Global Fixed Telecom Ranking by Revenue
ADTRAN & NSN Proprietary & Confidential
14 ® Adtran, Inc. 2007 All rights reserved
NewCo Revenue Map
15 ® Adtran, Inc. 2011 All rights reserved
Combined in Top 50 Globally
1 AT&T 26 STC
2 NTT 27 Chunghwa Telecom
3 Verizon 28 BSNL
4 Deutsche Telekom 29 Softbank Telecom
5 Telefonica 30 Etisalat
6 France Telecom 31 Windstream Communications
7 British Telecom 32 Portugal Telecom
8 China Telecom 33 TDC
9 America Movil (Telmex) 34 Cable & Wireless World Wide
10 Telecom Italia 35 Telenor
11 Telemar wireline 36 Telkom Indonesia
12 Telstra 37 Bharti
13 CenturyLink 38 MTS
14 Bell Canada 39 GVT
15 China Unicom 40 Telecom Egypt
16 Korea Telecom 41 Bezeq
17 KDDI 42 CANTV wireline
18 Rostelecom (Part of Svyazinvest) 43 Cable & Wireless Communications
19 Swisscom 44 Telecom Argentina
20 KPN Telecom 45 Maroc Telecom
21 SingTel 46 Qtel
22 EMBRATEL (part of America Movil) 47 TIM Brasil
23 Turk Telecom 48 Telekom Austria
24 TeliaSonera 49 MTNL
25 Telus 50 Entel (Chile)Source: Ovum 2Q '11 Global Fixed Telecom Ranking by Revenue
ADTRAN & NSN Proprietary & Confidential
16 ® Adtran, Inc. 2011 All rights reserved
Top Regional MSAN Ranking – Ports
Source: Infonetics Q3 2011 Report
ADTRAN is the Market Leader North America MSAN port shipments
NSN is a Top 3 supplier EMEA MSAN port shipments
ADTRAN & NSN Proprietary & Confidential
17 ® Adtran, Inc. 2011 All rights reserved
Top Tier Global MSAN Ranking – Ports
Source: Infonetics Q3 2011 Report
Combination of ADTRAN and NSN firmly establishes ADTRAN as a Top Tier Global MSAN Supplier
Global – MSAN Category (Port Shipments)
ADTRAN & NSN Proprietary & Confidential
18 ® Adtran, Inc. 2011 All rights reserved
Top Tier Global DSL Ranking – Revenue
Source: Infonetics Q3 2011 Report
Global – DSL Category (Revenue)
19 ® Adtran, Inc. 2011 All rights reserved
Global DSL Ranking – Revenue (w/o China)
Source: Infonetics Q3 2011 Report
Combination of ADTRAN and NSN firmly establishes ADTRAN as the Top Global DSL Supplier (excluding China)
Global (excluding China) – DSL Category (Revenue)
20 ® Adtran, Inc. 2007 All rights reserved
BB Growth by Access Type
21 ® Adtran, Inc. 2007 All rights reserved
Market Dependence on Fixed BB
Regions with strongest NewCo presence
22 ® Adtran, Inc. 2007 All rights reserved
Strong Market Share
Limited Market Share
Calix
ADTRAN
North American MSAN Market Positioning
Zhone
ALU
Sep
ara
te n
etw
ork
s
Co
nverg
ed
Bu
sin
ess &
Resid
en
tial
Ericsson
ZTE Huawei
Tellabs
23 ® Adtran, Inc. 2007 All rights reserved
Strong Market Share
Limited Market Share
Huawei ALU
ADTRAN ETSI (Today)
NSN (Today)
Non-US MSAN Market Positioning
ADTRAN/NSN
ZTE
Sep
ara
te n
etw
ork
s
Co
nverg
ed
Bu
sin
ess &
Resid
en
tial
24 ® Adtran, Inc. 2007 All rights reserved
Sales Strategy C
on
verg
ed
Bu
sin
ess &
Resid
en
tial
Sep
ara
te n
etw
ork
s
High Revenue Per Carrier
Tier 1 Global
Carriers
Low Revenue Per Carrier
Pan
European
Carriers
Regional
Carriers
Emerging
Markets
CLECs
Key competitors: ALU, Huawei, ZTE, Ericsson,
Zhone, ECI, Calix
Key Characteristics
•More sensitive to OPEX to drive competitive end-
user pricing
•Relationships are important, but not as unleveled
•Shorter cycles - quick adoption of new
technologies
Key competitors: ALU, Huawei, ZTE, Ericsson
Key Characteristics
•High revenue, big margin pressure with silos
•High touch with deep, long relationships
•Longer cycles and often unique requirements
•Complex OSS systems often precluding
converged business/residential networks
•Drive technology and cost curves
25 ® Adtran, Inc. 2007 All rights reserved
MSAN Dimensions of Competition
Higher Margin Services
Huawei and NSN are both very strong at delivering purpose-built, low-cost residential copper and
fiber services. The ADTRAN/NSN value is delivering a wider range of services, including business
Ethernet and service migration capabilities. We should focus on customers that value a platform
that delivers these higher-value capabilities.
26 ® Adtran, Inc. 2007 All rights reserved
Sales Strategy - Summary
Strengthen and expand Global Tier 1 relationships – Introduce differentiated, converged architecture concepts
– Secure long-term roadmap alignment
– Leverage for reference selling into other carriers/regions
Target non-Tier 1’s where timing plays to ADTRAN key differentiators and higher margin potential
Use market demographics to reinforce geo priorities
Expand global services and support to help offset competitive threat from large OEMs & to create higher business value relationships
Explore Ericsson and perhaps other non-BB oriented OEMs channel opportunities
Create coverage plan to insure key business strategy enabled – responsiveness, business solutions partner
27 ® Adtran, Inc. 2011 All rights reserved
Technical Synergies
• Optical Networking
• Carrier Ethernet
• Mobile Backhaul
• FTTP
• Services migration
• UC, vWLAN, and IP
Telephony
• Global support
and services
• ETSI-optimized
Broadband
Access Solutions
• MPLS/VPLS Edge
Integration
• Fixed broadband
access expertise
• Tier 1 Deployment
Experience
• Carrier VoIP
• Turnkey Solutions
ADTRAN’s Key Competencies NSN BBA’s Key Competencies
Common Strengths
ADTRAN & NSN Proprietary & Confidential
28 ® Adtran, Inc. 2011 All rights reserved
hiX 56xx Roadmap Summary
Highlights of hiX 56xx Roadmap Plans – R4.7M and R4.8M key customer commitments remain in place as scheduled – Top priority is integrating high-density fiber access solutions into hiX platform
• Includes GPON, XGPON1, and P2P Gigabit Ethernet • Requires updated high-capacity switch fabric and potential backplane upgrades
– VDSL2 and system level vectoring, including DSM/DLM functions, will be the focus for copper broadband access
– Optical Networking Edge (xWDM, ROADM, etc.) integration to be considered
Hardware • 48p VDSL2
• 72p ADSL2+
• 72p POTS
(H.248/SIP)
• 32p ISDN (H.248)
• 48p SHDSL
• 10x1G Fiber
• 48x100M Fiber
• 10GE uplinks w/
CXU_G1
• 2.5G/slot w/
CXU_G1
Software • AOE/ACI
integration
• ADTRAN
SFF DSLAM
Interop w/
10xGE card
• NV8xx
interop with
48p SHDSL
LTU
• NV8xxx
interop w/
10xGE card
Hardware • CXU_G2 (10 or 20G/slot)
• 8p or 16p GPON OLT
• 48p P2P Ethernet Card
• NG 48p VDSL2 w/ DSM-
L3
• 72p VDSL2 (17a) w/
MELT)
Software • 8pr VDSL2 Bonding
• MPLS Phase 3
• DT VoIP package
• IPv6
Release 4.8M
(Phase 1 – EOY 2012)
Current Solutions
2013
Q4 2012
2012
Q4 2013 Q2 2012
Hardware • 72p VDSL2 (17a)
• 32p ISDN PRI
Software • MPLS Phase 2
for DT (Dec 2011)
• Flexible VDSL2
Bonding (4pr)
• MPLS ATM
PWE3
• 10G/slot active
w/ 2-slots
Release 4.7M (May ’12)
Hardware Candidates • 16p GPON OLT
• 4p XGPON1 OLT
• CXU_Gx w/ up to
40G/slot (potential)
Software Candidates • GPON cross-slot
redundancy
• System-level vectoring
• Phantom mode (TBD)
Release x.y
(Date TBD)
ADTRAN & NSN Proprietary & Confidential
29 ® Adtran, Inc. 2007 All rights reserved
Next Gen Access Addressable Market
$4B/yr TAM by 2015
Growing Segments
Residential Broadband
– FTTP
– Ethernet FTTH
– FTTN
Carrier Ethernet
– Mobility Infrastructure
– Ethernet Business Services
Maturing Segments
POTS/DSL
– NGDLC
– MSAP
– DSLAM
327%Next Gen Access
2006-10
CAGRHistoric ADTRAN
327%Next Gen Access
2006-10
CAGRHistoric ADTRAN
597% CAGR
30 ® Adtran, Inc. 2007 All rights reserved
Combined Global Market Presence
~$0.9-1B USD in Sales
~500 Sales, Services &
Support personnel
31 ® Adtran, Inc. 2007 All rights reserved
Combined Broadband Presence
~$500M USD in BB Sales
~350 Sales, Services &
Support Personnel
#2 Global DSL Market Position
32 ® Adtran, Inc. 2011 All rights reserved
Summary and Conclusions
Business continuity for NSN BBA customer base
- Existing contracts will be transferred and all commitments fulfilled
- Product - Leverage existing BBA product assets with roadmap evolution – investment will be accelerated
- People - Maintain same customer facing and R&D teams
Complementary product portfolios
- Strong global MSAN Solutions
- Expands to Carrier Ethernet, Optical Networking and Mobile Backhaul
- Combined portfolios deliver compelling global roadmap
• Provides word-class sales, services and customer support
ADTRAN & NSN Proprietary & Confidential
33 ® Adtran, Inc. 2011 All rights reserved