1 ® Adtran, Inc. 2012 All rights reserved Enabling the Future Network.

1® Adtran, Inc. 2012 All rights reserved

Enabling the Future Network


ADTRAN at a Glance

Broad Portfolio of Solutions – More than 1,700 products

2011 Revenues - $717 million– Carrier Division - $569 million– Enterprise Division - $148 million

Strong Financials– Over 20 years of continuous

profitability

1,750 Employees Global Presence

– Headquartered in Huntsville, AL– Development centers:

Phoenix, AZ Ottawa, Canada Mountain View, CA Hyderabad, India Boston, MA NSN BBA Acquisition

ADTRAN Headquarters, Huntsville, ALNASDAQ: ADTN


Global Market Trends

Broadband / Ethernet Access – Exponential growth in bandwidth access– IP traffic will increase 4x over next five years– VoIP proven and continues significant growth

Mobility– Mobile data demand growing 15-25x over

next three years– Users have growing number of end-points

3 to 5 devices per person Smartphone, iPad, laptop, machine-to-

machine

Cloud Services & Applications– Shift to cloud computing drives demand for

Enterprise and SMB connectivity

Virtualization– Applications running on virtual machines increase efficiency, reduce

space and carbon footprint


New Devices and Applications

New Mobile Devices– iPad, tablets, smart phones, etc..

New Applications– Video, gaming, etc..– Cloud services– Voice over Wi-Fi

Major Usage Changes– Netflix is now 30% of Internet traffic– Over 50% of the 800M Facebook

users are active daily– Over 350M users access Facebook

on their mobile device– Two-way video chat

Skype Apple’s Facetime


Mobility Demand is Exploding

5B Mobile Phones Globally Smart phones are

Pervasive True Mobility is no Longer

a Convenience– Voice over Wi-Fi, Facetime

New Devices Rely on Wireless Connectivity– iPads

Mobile Data Traffic is Growing Exponentially

Wi-Fi Data Offload to Fixed Network is Necessary

Source: FCC


Cloud is the Future

IDC estimates the market for public cloud products and services will grow to $56 billion by 2014

Amazon’s S3 Cloud Storage Service skyrocketed from 262 billion in 2010 to over 566 billion in 2011– Over 370,000 requests per second

Small business public cloud computing spending is estimated to reach $6 billion by 2014

– (Source: In-Stat - December 2010)

Cloud services level the playing field for businesses of all sizes and deliver global scalability


ADTRAN Areas of Focus

Broadest Portfolio of Broadband Solutions– Fiber-to-the-Home/Node/Curb, Ultra Broadband

Mobile Infrastructure– Fixed access from exchange to cell tower– Optical access, Carrier Ethernet access,

Broadband access

Cloud Connectivity– Enterprise converged access– Hosted service provider solutions– Carrier Ethernet, broadband connectivity– Virtualization enables unlimited scalability

Broadband

Cloud

Mobility


ADTRAN – Complete Connectivity

Business & Residential Customers

Exchange

Provider’s Access Infrastructure



Exchange

• Broadband AccessIndustry’s most widely adopted access platform

• Ethernet Aggregation Cost-effective for high-density Ethernet deployment

• Optical AccessSpecifically designed for the access edgeRedefining the packet optical edge



Provider’s Access Infrastructure

• Business Ethernet ServicesFull range of service rates and service reach

• Business Service MigrationExtend product lifecycle

• Mobile BackhaulEfficient fiber Ethernet services



Business & Residential Customers

•Cloud Connectivity Industry leadership in service provider bundles

•Enterprise Communications Solutions which enable businesses to become more

capable and efficient

• Virtual Mobility Complete end-point freedom throughout the Enterprise

•ResidentialDeliver Ultra Broadband for premium services


2010 2011$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000 InternetworkingOptical AccessBroadband Access

$0

$100

$200

$300

$400

$500

$600

2006 2007 2008 2009 2010 2011

Mill

ions

Core Product Performance

• Solid performance in Core Products

• Broadband Access• Optical Access• Internetworking

ADTRAN Core Products

48% growth

65% growth

36% growth

25%growth


Market Characteristics

• Carrier consolidation‒ Releases investment

• Competitive push by non-wireless carriers

• Government mandates‒ US‒ Other regions

• Over the top video

• Continual bandwidth upgrades

Broadband Access Opportunity

Ultra BroadbandPremium internet and video to more customers at the lowest TCO

Fiber to the HomeUltra flexible, high capacity deep fiber solutions


Core Product Growth – Broadband Access

• Proven market share growth (2007-11)– #1 DSL & MSAP in NA– #3 DSL Globally– #4 MSAP Globally

• Increasing demand for premium internet, video delivery and business services

• Leveraging healthy forecast for high-speed services globally

2007 2008 2009 2010 2011 $-

$50,000

$100,000

$150,000

$200,000

$250,000

$300,000

$350,000

ADTRAN's Broadband Access Performance

Source: Infonetics

2011 2012 2013 2014 2015$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

ADTRAN's Broadband Addressable Market

MSAP DSLAM GPON OLTEthernet FTTH UBE

Eq

uip

me

nt

Re

ve

nu

e

($ B

)



• Rise of Cloud Services‒ Public & Private

• More Communications Enabled Business Processes‒ Unified Communications

• Explosion of Mobile Devices‒ End-user (not IT) dictates

the device‒ Demand for bandwidth

Internetworking Opportunity

Cloud ConnectivityMarket Leadership in public and private cloud connectivity

Virtual MobilityEnd point freedom across the Enterprise

Enterprise CommunicationsPremises-based solutions enabling business productivity


Core Product Growth – Internetworking

• Proven market share growth (2007-11)– #1 Cloud Connectivity– #1 SIP Trunking– #2 Access Routers

• Market Leadership in Carrier Bundled Business Services

• Highly Differentiated Virtual Wireless LAN and Unified Communications

2007 2008 2009 2010 2011 $-

$20

$40

$60

$80

$100

$120

$140

$160

ADTRAN's Internetworking Performance

Mil

lio

ns

$

2011 2012 2013 2014 $-

$2,000,000,000

$4,000,000,000

$6,000,000,000

$8,000,000,000

$10,000,000,000

$12,000,000,000 Internetworking Addressable Market

Carrier Ethernet

Wireless LAN

Enterprise Security

IP Business Gateways

Routers

Unified Communica-tions

Managed Ethernet Switches

Source: Infonetics



• Massive Traffic Growth‒ Limitless Optical Capacity

• Simplified Operations‒ Optical Ethernet

• 5B Mobile Devices Worldwide‒ Computer on your hip

• Mobile Broadband‒ Exponential Bandwidth

Requirements

Optical Access Opportunity

Optical Networking EdgeRight-sizing Packet Optical to reduce complexity at the network edge.

Mobile BackhaulEnabling the promise of Mobile Broadband


Core Product Growth – Optical Access

• Expanding Optical Addressable Market– SONET WDM– Access & Transport– U.S. Global

• Growing Market Share– Highly Differentiated

Solutions - ONE– Reducing Network

Complexity– Accelerating Services

Delivery

• Pull-Thru Revenue – ONE differentiation pulls

through sales in Broadband Access

2007 2008 2009 2010 2011 $-

$20

$40

$60

$80

$100

ADTRAN’s Optical Access Performance

Mill

ion

s $

Source: Infonetics

2011 2012 2013 2014$0.0

$0.4

$0.8

$1.2

$1.6

$2.0ADTRAN's Optical Addressable Market

Bill

ion

s $


0

10

20

30

40

50

60

70

80

90

Quarterly YoY Change YoY Change

Revenue($M)

International Growth Progress

International Growth

2011 Revenue Contribution

International

88.2%

11.8%

Domestic

165%Growth

215%Growth

2010 20102011 2011

Q4 2011 over Q4 2010


Planned Acquisition of NSN’s BBA Business

ADTRAN announced that it plans to acquire Nokia Siemens Networks Broadband Access (BBA) business

NSN BBA business includes– MSAN, GPON, DSLAM and related

Network Management Solutions and associated IPR

– Incumbent customer base of carriers across >20 countries in Europe, Middle East, Africa, India, Russia and Asia

– Strong team of sales, service, support, and engineering

Acquisition is anticipated to close by the end of April 2012

Advances ADTRAN’s Top Tier Global Supplier status in fixed broadband access

EPS neutral for first full year, accretive thereafter


Purpose of Acquisition

Accelerates strategic plan for global growth

- Incumbent supplier to top Carriers across the globe, including DT, Bezeq, Sunrise and others

- Regional Diversity Complementary product portfolios

- Strong global MSAN Solutions- ADTRAN adds Carrier Ethernet, Ethernet

Business Services, Mobile Backhaul, Enterprise solutions…

- NSN BBA adds MPLS, H.248, ETSI voice, global services…

- Combined portfolios deliver compelling global roadmap

• Strengthens Engineering and Services resources to focus on global accounts

• Provides word-class sales, services and customer support


NORTH AMERICA

SOUTH AMERICA

EUROPEASIA

AUSTRALIA

ANTARCTICA

AFRICA

ADTRAN Customer Focus


NORTH AMERICA

SOUTH AMERICA

EUROPEASIA

AUSTRALIA

ANTARCTICA

AFRICA

NSN BBA Customer Focus


NORTH AMERICA

SOUTH AMERICA

EUROPEASIA

AUSTRALIA

ANTARCTICA

AFRICA

Combined Customer Focus


Top Tier Global MSAP Ranking – Ports

Source: Infonetics Q3 2011 ReportGlobal – MSAP Category (Port Shipments)


Top Tier Global DSL Ranking – Revenue

Source: Infonetics Q3 2011 Report

Global – DSL Category (Revenue)


Annual Revenue and EPS

2007 2008 2009 2010 2011

$477$501

$484

$606

$717

Revenue: 2007-2011($ millions)

2007 2008 2009 2010 2011

$1.10 $1.22 $1.17

$1.78

$2.12

EPS: 2007-2011


Return on Invested Capital and Economic Value Added Spread (trailing twelve months)

*Adjusted for nonrecurring tax items.

Information derived from Bloomberg as of January 1, 2012

ADTRAN Cisco Ericsson Fujitsu Alcatel ZTE Westell Tellabs* Calix Ciena Zhone-30.00%

-20.00%

-10.00%

0.00%

10.00%

20.00%

30.00%

ROIC EVA Spread


• Highly Differentiated Solutions That Deliver Immediate Business Results

• Large Growth Markets

• Strong Company

• Solid Performance

• Global Presence

1 ® Adtran, Inc. 2012 All rights reserved Enabling the Future Network.

Documents

Transcript of 1 ® Adtran, Inc. 2012 All rights reserved Enabling the Future Network.