2Sandoz Family Foundation Who are we?Accounting Revenue Growth(€ in millions)Sandoz Family Foundation’03-’10 CAGR: 51%Operates in 29 European countriesServes more than 3000 European and USA customersOwns and operates one of the largest and most advanced voice and data networks in EuropeEBITDA positive 2009 & cash flow positive 2010Key supplier of services to all European PTT’s
3Interoute’s competitive advantages begin with network ownership Only 17% of Interoute’s 48 fibre pairs are currently being used, allowing for rapid, cost-effective deployment of new bandwidthFuture proof network: new fibres can be deployed in spare duct as new fibre technologies emergeTotal build cost: €2.7 billion
4Company highlights Fully-Owned Pan-European Network Asset Centrally managed, locally operated, offering service/support in 15 European languagesStrong EBITDA growth (67% year-on-year, to €40m 2009); EBITDA+ since Q3 2007Operational Cashflow Positive, self-funded businessContinued growth through recessionExceptional Operational Gearing and high Gross Margins (70%+)Established presence in two markets: wholesale and corporateBridge between East and West, North and SouthScalable Next Generation NetworkFuture-proofed: Europe’s largest fibre and duct reserve, and extensive Data Centre capacityLeader in deployment of advanced network technology, including IPv6Today, we intend to focus on some highlights of the Interoute story:The pan-European network asset, the platform upon which rests the foundation of Interoute’s successThe fibre, duct and data centre capacity that makes it future-proofThe architecture that makes the business extremely scalableHow we’ve proved that scalability in both the wholesale and corporate marketsWe’ll try to explain how the asset helps drive growthAnd the kind of growth that falls to the bottom line, with Gross Margins near 70%Our focus is Europe, but we’ve created some key relationships in Russia, North Africa, the Mideast and even India that have helped us serve as a Bridge to those regions.Interoute is about GROWTH – 67% CAGR since we relaunchedAnd that growth, as I mentioned, is translating into increasingly strong EBITDA performance.
5Interoute at a glance Accounting Revenue Growth EBITDA (€ in millions)Accounting Revenue Growth(€ in millions)’03-’10 CAGR: 51%Revenue Sector Split2009 Headcount2004200949%51%WholesaleThis slides describes at a glance how we’ve implemented the STRATEGY Bob outlined:Starting on the bottom right: we’ve focused on COSTS to keep Headcount growth low, concentrating on SELLING and SERVICING CUSTOMERSOn the bottom left: you can see how we built on the TWO pillars Bob described – WHOLESALE and CORPORATE markets. Today, they each comprise about 50% of our revenues.On the top right: GROWTH has been a Company fixation, from 0 to €246m in annual accounting revenue since 2003, a Compounded Annual Growth Rate of 67%And on the top left: that GROWTH hasn’t been accomplished “at any cost.” We’ve maintained margins twice that of our closest competitor. As a result, EBITDA is growing solidly.We’ve grown rapidly with controlled costs and increasing EBITDA in large part because we base most of what we do ON THE NETWORK. This network-centric focus has paid off – and will continue to drive the Company.CorporateTotal: 929Total: 920
6Our customers Government & Government Channels Financial Services RetailersFinancial ServicesService IndustryGovernment & Government ChannelsNetwork OperatorsIndustrials
7Value - From the Ground to the Cloud We offer a broad portfolio, ranging from physical network based products (the Ground) to virtual network-based services (the Cloud). Our virtual network-based services perform better because we own and manage the underlying physical network.Customers can choose how much of their ICT infrastructure they want to build and manage for themselves, and how much they want us to manage for them. And because customers can change the ratio of what they manage vs what Interoute manages as their business needs change, they’ll always be able to get the ideal balance of cost vs efficiency vs performance that’s right for their business.
9Interoute serves as the European Union’s duct and fibre network 55,000 km lit fibre28 countries connected99 cities connected21 city networks59 data centres8 landing stationsInteroute serves as the European Union’s duct and fibre network
11Including 8 core networked data centres with managed services All networked and integrated on backbone to support geographic fallback via virtual server and the full product rangeProvides a pan-European platform for the delivery of network-centric ICT servicesISO equivalent certified: Amsterdam, Berlin, Geneva and MunichWell suited to serve the growing demands of virtualization24/7 hands-and-eyes service offered at the nine facilities illustrated on this pagePrague Data Centre in blue is an internal DC for the Interoute NOCBerlinAmsterdamLondonStockholmPragueMunichParisGenevaInteroute’s premier hosting facilities complement the network assetEight of the network integrated DCs shown here lie at the heart Interoute’s hosting portfolio. The ninth, Prague, serves largely internal requirements.Typically tier 3 & 4 DCs with a mix of Interoute built and third party sites:They have high security specificationsFocus on dedicated managed hosting inc load balance, geographic resilience and security servicesSupport network based virtual servers servicesAre maintained by local staff but centrally monitored 24x7 from Geneva to contain costAn ISO27001 program is ongoing with 4 centres accredited to dateMadrid
12Plus 50 additional fibre-connected data centres 3 Tier 46 Tier 350 Tier 132 of the Tier 1 centres can be upgraded to Tier 2 with the addition of a UPSCurrent plans to build virtual service centres in Rotterdam, Dusseldorf and BrusselsFully redundant service centres using virtualisation to minimise building upgrade cost3BucharestIn addition to those nine Tier 3 and 4 facilities, Interoute has 50 other data centres on-net, comprising about 80,000 m2 of space. About 20% of that space is built out.32 of the Tier 1 centres identified on the map can be upgraded to Tier 2 with the addition of a UPS.Current hosting centres are only one part of the Facility asset:Interoute provides for colocation at all POP & ILA sites on duct routes as part of its dark fibre offeringAdditionally, we offer extensive carrier (DC) colocation at 19 POP locations across EuropeHISTORY: The original Alcatel built network was provisioned with warehouses, typically on 20 year leases for almost all POPs, with 50 sites including the above representing over 80,000 sq.m of space, of which some 20% is built out.FUTURE: VIRTUALIZATIONWith the trend of increasing virtualisation, the need for customer proximity is decreasing. These sites thus represent a unique opportunity for supporting virtual colocation and server services. The first virtual colocation sites are currently being planned in Brussels, Dusseldorf & Rotterdam.Tier 4 (3)Tier 3 (6)Tier 1 (50)Source: Uptime Institute
13What Interoute brings Imagine the potential Your passport to flexibility
14What Interoute brings: Imagine the potential Your need for flexibilityEasy changes when you need them – not when contract allowsSingle platform – Interoute does not have the ‘silo based’ product mentality that other large carriers do and we work for the customer, not against themNetwork outsourcing servicesAdd new services in software – temporary, permanent, short-term, long-termMove applications into the cloud at your own paceAn end to forklift upgrades – less disruption and a more transparent service costUniqueAdvanced NGN connectivity servicesDelivering all services over a single network platformMaking VPLS available in over 25 countriesBringing commercial innovation to make it contractually painless to change servicesAs a customer, you should not be forced to wait until your previous network contract expires before you can evolve your ICT infrastructure?When you are connected to Interoute UConn, you have a number of options that would not be available to you via traditional telecommunications service providers.Imagine being able to take services temporarily as your needs dictate, such as a temporary point-to-point Ethernet connection between two data centres for a short term during a migration?Or what about longer term changes? How many service providers would allow you to change your routing from VPLS to MPLS 1 year into a 3 year contract without re-setting the clock? Interoute UConn does.To facilitate this flexibility, all of the UConn enabled products have a harmonised contract/SLA structure so that changing services does not involve a major legal exercise.
15Interoute: Your passport to flexibility Future-proofedWhatever service you buy today, make sure that your network can provide the services that you need for the coming yearsServices delivered as software, making provisioning quick and simpleThe Interoute ResponseCommon contract & SLA structureServices with the same cost base, same price (no technology premium)Change logical services without changing your contract termSoftware services can be purchased for as little as 1 monthInteroute Unified Connectivity is UNIQUE.Nobody else in the market today can do the following:VPLS over any access technologyVPLS in 25 countriesAbility to deliver so many services over a single core network platform
16Advanced NGN connectivity and voice portfolio Ethernet: Covering both managed and unmanaged services on our SDH and MPLS platforms, Interoute’s dual approach to ethernet provides maximum bandwidth and architecture options to our customers.SDH: Private line options from E1 to STM-64 across Interoute’s entire network footprint. Giving maximum availability and coverage from a single supplier.Wavelength: Our Wavelength network connects over 200 datacentres and IX’s in 72 cities across 19 countries with a 10 day delivery option. Allowing you to get the capacity you want, where and when you need it.Dark Fibre: Backed by fully owned colocation centres, Europe’s most future-proof, homogenous fibre network provides the efficient, long term flexibility and assurances you need to build your next generation networks.Duct: >18,000Km of Duct network owned and operated by Interoute’s extensive O&M program.IP Services: Interoute offers two IP Transit services: Global Transit advertising routes to all Internet destinations, and Euro Transit advertising a partial routing table of Interoute's direct customers and peers. The choice gives you better control over your IP cost base.Channel VPN: The Interoute Channel IP Virtual Private Network (IPVPN) service provides Partners with an efficient, scalable, and flexible way of connecting sites in multiple locations and countries in order to provide their end customers a single wide area network capability.DUCTDuct Solutions are an indication of network independence, management strength and most of all security. By taking a Duct network off Interoute you are taking the very building block for all network services.With the flexibility to blow as much fibre as you require and to take co-location services from Interoute, duct empowers you to build your own network without the massive undertaking of digging up thousands of kilometres of highways. Further, Duct, also helps you to keep a network as secure as possible allowing you total control over the physical asset. DARK FIBEROur dark fibre service allows you the flexibility of choice over the service platforms you wish to deploy. Choose to overlay SDH, DWDM or IP, to name but three. And you can be safe in the knowledge that you have the control to expand your network as your business grows. We also have the density of network where it counts.In short, more than 54,000km of lit fibre, providing access between the 120 major carrier hotels, Internet exchanges and data centres in the central business districts within our 20 metropolitan area networks (MANs). Even if your circuit terminations are not within our PoPs, because our MANs are generally close by, we can extend our reach and work with you to design a network that meets your exact needs
17Current 4 roadmap areasRoadmap LIVE is divided into 4 distinct platforms. Each platform takes responsibility for particular product areas as shown below.UNIFIED Connectivity (UConn)UNIFIED Communications (UComm)UNIFIED Computing (UComp)TransmissionPacket based network transportWavelength, SDHNetwork OutsourcingWholesale bandwidthInfrastructureInternet AccessFast TradePoint to Point EthernetEthernet VPN (VPLS)IPVPN (MPLS)Interoute ONEConferencingVVNColocationVirtual and Dedicated ServersStorage & BackupDisaster Recovery & Global Load BalancingApplication Management & Professional ServicesNetwork Security & Local Traffic Management
18Service 3 is Internet Access Unified Transport Network: UT Packet SolutionSvc 3LSPVLAN3PERLSPVLAN2PERIP / MPLSVLAN2Site XSite YVLAN2VLAN3EVC1VLAN1EVC4Svc4Svc 4Site CEVC4Svc4Unified Transport NetworkUT SwitchUT SwitchEVC1VLAN1EVC2VLAN2EVC3VLAN3EVC4Svc 4EVC1VLAN1Site AEVC2VLAN2UTUTVLAN1UTSite BVLAN2VLAN1VLAN3Svc 4Site DUCVLAN2Svc 1UCUCSvc 2Svc xVLANxEVCxSvc 1Svc 2Svc 3Svc 1Service 1 is Point-2-Point EthernetSvc 2Service 2 is Layer 2 (VPWS) VPNSvc 3Service 3 is Internet AccessSvc 4Service 4 is Fast Trade
19Internet Local Breakout What Interoute can doRemote Site/Remote ClientInternetDDoS Protection &Network SecurityMedia LivestreamPartner MPLS NetworkOff-netOffice(s)PSTNInternet CentralInteroute OneSoftswitchLocal DSLProviderIP/SoftPhoneDSL Primary3G BackupThe IP NetworkVirtual HostingData CentreMobileNetworkOperatorInternet Local BreakoutCustomer HQBranchOffice(s)MicrosoftOCSPoint to PointEthernetComplexDedicatedHostingE1 PrimaryDSL BackupEthernetBackupEthernetPrimaryColocationBrief build-up slide showing all of our corporate products. It builds as follows and key things to mention are:Click 1 – All networks appearClick 2 – Customer HQ. Talk about resilience, dual routers and Ethernet which offers high speeds at comparatively low cost (and is available everywhere)Click 3 – Regional Main Office. Talk about resilience in a lower cost way using technologies like DSL. Talk about private DSL coverage in 14 countriesClick 4 – Branch office. Talk about lower cost, lower SLA to reflect business needs. Talk about GPRS backup as a recently launched option for low speed low cost connectivity, and ISDN still being possible.Click 5 – Off-net office. Talk about our off-net partners like Global Crossing, PACNET and Sprint. Talk about resilient interconnects and the advantages on performance by having MPLS for off-net locations (that traffic does not come to the Interoute network and back). Mention that these providers offer dense regional coverage (like Interoute) and are competitive on pricing in that region.Click 6 – DDoS and Security. Mention single policy enforcement point at the edge of the network, and that Interoute use best of breed vendors such as MessageLabs, Cryptocard etc.Click 7 – Internet Central. Cost effective Internet access within the network for all sites.Click 8 – Remote clients/sites. IPSec and SSL access for secure VPN access across the public Internet from anywhere. Mention that we offer this in over 100 countries todayClick 9 – Internet Local breakout. Where a customer needs to keep their own Firewall but have Internet over the same tail circuit to save cost and increase economies of scale. Mention this can be done for other things such as streaming or voice also.Click 10 – Voice (TDM PBX). Talk about the fact that we have voice soft-switches all over the network and can provide breakout in most countries. We can take feeds from existing TDM devices using Vegastream Media convertersClick 11 – Voice (IP PBX). Talk about SIP or H.323 IP devices that can plug straight into our network to get voice functionalityClick 12 – Soft phones or OCS. Talk about them integrating directly with our session border controllers, how Interoute ONE enables collaboration and federation between OCS users. In general terms point out that the Interoute voice proposition allows customers to take the service with a range of access types and even within the same IPVPN customers can have different ways to connect.Click 13 – Hosting. Cover the secure data centres that are an integral part of the network, and talk about the three basic corporate services, colocation, virtual hosting and complex dedicated hosting. Note that many customers actually have a combination of both virtual and dedicated and our Data Centres are one of the things that makes IBiTN a reality.Click 14 – Point to Point Ethernet – A key component in the connectivity story is the ability to deliver low latency high performance layer 2 connections and the Interoute network supports both layer 2 and layer 3 connectivity. We will recommend whatever combination works best for you.Click 15 – Media Streaming – Talk about our high performance network based media manager platform, as used by a number of leading media companies. Talk about how they can be delivered in combination with hosting and IPVPN to both external users over the Internet or internal users over the VPN network.In conclusion, what we have shown is simply the building blocks that Interoute will use to build the most suitable solution for your needs to deliver the application performance you need.VoicegatewayRegionalMain OfficeTDM PBXCustomerFirewallCustomerServerIP PBX
20Customer Web PortalGives in depth information to IT managers about their network and service performanceService ManagementOrder ProgressTrouble Ticket informationView statusRaise a ticketSLA ReportingAll network related SLA parameters (RTD, Packet Delivery, Site AvailabilityPerformance MonitoringUtilisationReal Time (to 5 minutes)Billing InformationInvoice history
22An operator lands in Europe and declares its independence from incumbent competitors, made possible by Interoute’s lit-fibre solutionCustomer need: Customer had a strong domestic skill set but did not want to deploy in-house staff across a large European footprint.Interoute solution:The route consisted of four sections:Timisoara – Vienna (x2); Vienna - Frankfurt (x2)Network deployment of 3700Km70% of the fibre route was off-net.Project Timescales:Negotiation & Design 2 MonthsDelivery & Integration 3 MonthsCustomer accelerated their time to market by 12 months and met their own high-capacity demands.Initial build: Interoute acquired and integrated: Fibre, Colocation & EquipmentOngoing Support:Interoute provide FLM, 2nd and 3rd Line support; Customer NOC covers 1st line support;Both NOCs monitor the network;Interoute provide a spares warehousing and management service;New services are provisioned using Customer’s 1st line and Interoute FLM.
23A non-telecoms operator sought a pan-European solution for the construction and deployment of a secure network, which Interoute built and now helps to manageCustomer need: Customer had a strong skill base at a different technology layer and needed Interoute to provide a layer 1 skill set, and to guarantee security.Interoute solution:A 9,000 km, Pan-European fibre network was provisioned – including acquisition of equipment sourced. The subsequent network is managed by Interoute.How was it built?About 75% of the network was on Interoute’s backbone;Interoute dug another 2% of the required route;Interoute acquired 3rd party fibre for the remaining 23%.The project, from start to finish, was 6 months.Initial customer equipment was integrated into a service package providing integrated Fibre, Colocation and equipment support.Ongoing Support:New Equipment acquisition and provisioning;DCN network Hands and Eyes;Ongoing Spares management ;Equipment Hands and Eyes Service; Customer retains NOC control of the network.
24A European operator gets a major upgrade of capacity – fast and without additional headcount solution – with Interoute’s Optical Private Network (OPN)Customer need: An operator was facing rapidly expanding DSL penetration, and thus surging backhaul capacity demand. But they did not want to deploy in-house staff across a large European footprint. And they needed a solution fast.Customer required a solution that would quadruple their pan-European capacity while providing network resiliency.Interoute’s solution: a diverse 800Gb Optical Private Network covering Bari, London and Frankfurt. With option for intermediate drops at 8 other cities.The solution went from initial enquiry, through design, price negotiations, contracting, delivery and commissioning and handover within 5 months.
25Unified Connectivity: A revolution in access Unified Connectivity Service GatewayCustomerNetworkThe Access Options:DSLLeased LineEthernetSimplicity:1 . Choose Location2 . Choose access line- Cost- Bandwidth- Number of users- Performance/SLA- Resilience requirements3. Choose service(s)- 1 or more services- Short or long termThe Services:Internet AccessPoint-to-Point EthernetLayer 2 (VPLS) VPNLayer 3 (MPLS) VPNAccess to VoiceAccess to Private/Public CloudsInteroute Unified Connectivtiy (UConn) really is a revolution in access. Interoute have simplified the provision of how customers connect to our network, into one integrated platform that can deliver what ever servce(s) over what ever access type.Using the new UConn Service Gateway, Interoute can deliver any of the services listed above over any of the access technologies shown. Because we are extending our core (MPLS) network direct to the customer location, we can also provision multiple services as seamlessly and easily as a single serviceUnlike our competitors Interoute have swept away any traditional product-based mentality, allowing you as a customer to specify the service mix that is right for you on a case by case basis. The UConn architecture then brings you further commercial benefits during your contract with Interoute, allowing you to change the service mix as your needs change, not every 3 or even 5 years.UConn services are delivered as software components over the common architecture, once again opening up a wealth of opportunities for you.25
26How is UConn different? - Flexibility and Scalability IPVPNVPLSInternetVoiceHostingEthernetLeased LinexDSL*Unified ConnectivityService GatewayInteroute Unified Connectivity:Provides a single, scalable platformRobust SLA’s; single contractHybrid solutions and services that change on demandServices independent of access circuitFlexible. Scalable. Simple.With Interoute UConn once a customer has a service gateway on a location a customer can select from a range of services without the need to change the physical CPE or the access circuit (unless needing to upgrade).Customers could just take an IPVPN or they might just want ethernet – the same network delivers these services – you could have both! (NB: xDSL awaiting a software bug to be fixed). But how does this actually benefit the customer – what are examples of how this can benefit them?Interoute UConn can only be provided because we own a network. We understand this complex situation so that we can simplify it.As a customer you have scalability because everything is delivered as a standard product over the same platform. BUT, crucially it is ultimately flexible because moving between services does not mean moving between networks, and certainly does not mean moving providers.
27Building our reputation April 12, 2010 The Forrester Wave™:European WAN Services, Q2 2010Global Crossing, Interoute, and T-Systems are Strong Performers. Interoute differentiates its offerings by innovating; it also leads the entire pack with aggressive pricing.It’s converged access service (“Unified Connectivity”) is innovative — it can offer multiple services including VPLS over xDSL access circuits. Its IP VPN service offers particularly aggressive pricing and strong SLAs; flat rate, simple pricing; and end-to-end SLAs as standard for the last four years, and is now moving to application performance SLAs. It offers self-provisioning of any “soft” order. MNCs should consider using Interoute as part of a multisourcing strategy