Candidate Employee Briefing - ADTRAN · 2012. 1. 12. · 10 Telecom Italia 35 Telenor 11 Telemar wireline 36 Telkom Indonesia 12 Telstra 37 Bharti 13 CenturyLink 38 MTS 14 Bell Canada

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


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

http://www22.verizon.com/http://www.telepacific.com/index.asphttp://media.merchantcircle.com/22656407/xo.logo_full.gifhttp://www.earthlinkbusiness.com/


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



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


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



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


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


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


ADTRAN Revenue Map


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



NSN Revenue Map


NSN-BBA in Top 50 Globally

1 AT&T 26 STC


3 Verizon 28 BSNL


















21 SingTel 46 Qtel







NewCo Revenue Map


Combined in Top 50 Globally

1 AT&T 26 STC


3 Verizon 28 BSNL


















21 SingTel 46 Qtel







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



Top Tier Global MSAN Ranking – Ports


Combination of ADTRAN and NSN firmly establishes ADTRAN as a Top Tier Global MSAN Supplier

Global – MSAN Category (Port Shipments)



Top Tier Global DSL Ranking – Revenue


Global – DSL Category (Revenue)


Global DSL Ranking – Revenue (w/o China)


Combination of ADTRAN and NSN firmly establishes ADTRAN as the Top Global DSL Supplier (excluding China)

Global (excluding China) – DSL Category (Revenue)


BB Growth by Access Type


Market Dependence on Fixed BB

Regions with strongest NewCo presence


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


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


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


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.


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


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



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)



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


Combined Global Market Presence

~$0.9-1B USD in Sales

~500 Sales, Services &

Support personnel


Combined Broadband Presence

~$500M USD in BB Sales

~350 Sales, Services &

Support Personnel

#2 Global DSL Market Position


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


Documents

Candidate Employee Briefing - ADTRAN · 2012. 1. 12. · 10 Telecom Italia 35 Telenor 11 Telemar wireline 36 Telkom Indonesia 12 Telstra 37 Bharti 13 CenturyLink 38 MTS 14 Bell Canada