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Telecom Technology and Services Group U.S. Communications Service Provider Quarterly

Spring 2020 Vol. 10, No. 2

IN THIS ISSUE

2 Introduction and Sub Sector Definitions 3 U.S. Summary Comments: Public Markets 4 Public Market Summary Charts 1-6 5 U.S. Communications Service Provider Stocks: M&A Summary Charts 1-2 6 Announced Transactions 7 Announced Transactions with Revenue Multiples 8 Sub Sector Analysis: Large Cap Telecom Charts 1-6 9 Sub Sector Analysis: Alternative Telecom Charts 1-6 10 Sub Sector Analysis: Hosted and Managed Services Charts 1-6 11 Sub Sector Analysis: ILEC and Diversified ILEC Charts 1-6 Investment Banking and Advisory Services 12 Sub Sector Analysis: Cable and Video Charts 1-6 FOCUS Investment Banking LLC is a leading investment bank 13 FOCUS Telecom Technology and with specialized telecom technology and services expertise, Services Team concentrating on providing highly tailored services to emerging middle market and larger organizations in this sector: • Mergers & Acquisition Advisory • Corporate Development Consulting • Strategic Partnering & Alliances • Capital Financing, Debt & Equity • Corporate Valuations U.S. Communications Service Provider Quarterly

By Richard Pierce, FOCUS Managing Director and Telecom Technology and Services Team Leader

FOCUS believes that the need for communications ser- • Has a breadth of knowledge that covers most segments vices has never been greater. Large enterprises, small and of the telecom industry, medium sized businesses and individuals have all come • Has seasoned bankers with decades of telecom industry to rely upon ubiquitous access to voice, video and data experience, services to run their day-to-day activities. Furthermore, the importance of Communications Service Providers • Has a proven transaction methodology for delivering (CSPs) appears poised to increase further as they begin results, to enable a variety of new services ranging from hosted • Is equally comfortable with buy side and sell side M&A, PBX and videoconferencing platforms to in-home secu- rity and energy management solutions. Access to capital • Leverages an experienced team of research professionals, and the benefits of scale will mean that a small number of • Has a national presence with coverage of both east and large companies will continue to dominate certain areas west coasts. such as mobile wireless and video. However, FOCUS con- tinues to see opportunities for middle market CSPs. While Sub Sector Definitions not as large as the industry giants, they continue to thrive by developing innovative business models that share one Large Cap: Large, diversified communications service pro- or more characteristics such as capital efficiency, cus- viders that control a significant number of former RBOC tomer responsiveness, an advanced technology platform access lines and/or have a nationwide wireless operation. and a focus on an underserved industry vertical or geogra- Alternative Telecom: Competitive carriers that primarily phy. Furthermore, it is often the middle market CSPs that provide basic voice, data and transport services to busi- point the direction for the future of the industry. FOCUS nesses and other telecom service providers. is proud of its commitment to the CSP sector and we are excited about the prospects for middle market companies Hosted & Managed Services: Companies that provide in this space. hosted VoIP telecom services as well as additional hosted offerings such as audio and video conferencing. The FOCUS Telecom Technology and Services group con- ILEC & Diversified ILEC: Non-RBOC incumbent carri- sists of two professionals with a combined 30+ years of ers, many of which have branched out into other sectors of transaction experience across a wide variety of telecommu- communications services. nications-related companies. The FOCUS Telecom team is uniquely qualified to help middle market clients reach their Cable & Video: Incumbent cable service providers, satel- strategic objectives because the group: lite video providers and competitive video providers whose core business is providing video services to residential • Devotes significant senior level resources to executing customers. transactions for lower middle market clients,

2 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro U.S. Summary Comments

Public Markets The Hosted and Managed Services sub sector is also the Not surprisingly given the current state of the public only sub sector in the CSPI to deliver a positive return over markets, it was a challenging three-month period for the the past 12 months with a gain of 4.9%. Once again, Ring- FOCUS Communications Service Provider Index (CSPI). Central was the main engine for the sub sector’s growth The sector plummeted just shy of 20% over this time as the stock nearly doubled in value over the past year. frame, which was roughly in-line with the 20.0% drop in Multiple performance for the sub sector was mixed. The the S&P 500 but greater than the 14.2% drop in the NAS- revenue multiple declined a full turn from 8.6x a year ago DAQ over the corresponding time frame. The situation looks to 7.6x at the end of the current reporting period, while the a bit better when measured over the full year period. The EBITDA multiple increased from 78.8x to 120.5x over the CSPI was down only 9.3% in the past 12 months, although same time period. once again this underperforms both the S&P 500 (down 8.8%) and the NASDAQ (down 0.4%). Sector multiples ILEC and Diversified ILEC are lower than they were in the year-ago period, although After turning in a positive return for the winter reporting the drop is not as dramatic as we might have feared. The period, the ILEC & Diversified ILEC sub sector managed sector revenue multiple dipped from 2.7x t0 2.5x, while the to give up all of these gains (and then some) with a decline sector EBITDA multiple fell from 8.0x to 7.2x. of 20.5% in the spring. Even with these declines there were still some reasons for optimism as both Consolidated Large Cap Communications and Bell posted strong gains The Large Cap sub sector suffered a dramatic 19.6% of 17.3% and 39.8%, respectively. However, this was not decline in our spring reporting period. was the enough to stave off the nearly 60% decline at Frontier standout performer with a drop of “only” 12.5%, while Communications as the company marched inexorably AT&T and CenturyLink both fell more than 20%. The towards a bankruptcy filing. The sub sector’s performance sub sector is also down 8.5% year-over-year, with the sub over the full year period is even more dismal with a decline sector’s steepest decline coming from CenturyLink (down of 39.2%. Frontier was once again the worst performing 21.1%). Sub sector multiples fell from 2.5x revenue and company over this period, but Consolidated Communica- 7.2x EBITDA at this time last year to 2.4x revenue and tions and & Data Systems also suffered sig- 6.7x EBITDA at the end of the current period. nificant losses. The lone bright spot was , which was up more than 50% as the result of a bidding Alternative Telecom war between rival take-private suitors. Even with the sub The Alternative Telecom sub sector actually managed to sector’s steep declines, multiples have remained fairly con- eke out a 1.9% gain in the past three months. However, stant. The sub sector revenue multiple was unchanged from this increase was entirely the result of a 24.6% jump at a year ago at 1.7x, while the EBITDA multiple dipped Cogent Communications. GTT and Uniti, however, were slightly from 5.2x to 5.0x over the past year. both hit much harder with declines of 30.0% and 26.6%, respectively. The sub sector is also down more than 20% Cable and Video over the past 12 months. Unfortunately, a gain of more The last sub sector to be addressed was also the portion of than 50% at Cogent Communications was not sufficient the CSPI that was hit the hardest in the recent downturn. to overcome losses at all of the other companies in the sub The Cable and Video sub sector was down 23.6% this sector of between 46% and 77%. Sub sector multiples period as every single company in the index save one (Cable closed out the period at 4.3x revenue and 9.6x EBITDA. One) suffered a double-digit loss. and WOW Both of these are lower than year-ago multiples of 5.0x were particularly hard hit as they shed 43.6% and 35.8% revenue and 11.9x EBITDA. of their values, respectively. Sub sector performance is not nearly as bleak when measured over the past 12 months, Hosted and Managed Services although it is still down 12.4% for the year. and The Hosted and Managed Services sub sector was the only are both up sharply year-over- other sub sector in the CSPI to end up in the black in the year, but a 14.0% drop at as well as significant midst of the recent market turmoil. The sub sector was up declines at Dish Network and WOW dragged the sub sector 3.1% in the past three months driven by a 5.1% gain at into the red. Sub sector multiples are down fairly steeply Bandwidth and a 25.6% gain at RingCentral. However, from where they were a year ago and closed out the period gains were not broad-based as all of the other four compa- at 2.5x revenue (down from 3.1x a year ago) and 8.0x nies in the index were in negative territory for the period. EBITDA (down from 9.8x a year ago).

www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 3 U.S. Communications Service Provider Sector: Public Market Summary

Twelve Month Index Returns Sector and Sub Sector Returns

150.00% 12 Month 3 Month Communications Service Provider -9.3% -19.6% 100.00% Large Cap -8.5% -19.6% Alternative Telecom -23.3% 1.9% 50.00% Hosted and Managed Services 4.9% 3.1% ILEC and Diversified ILEC -39.2% -20.5% 0.00% Cable and Video -12.4% -23.6% S&P 500 -8.8% -20.0% NASDAQ -0.4% -14.2% Communications Service Provider S&P 500 Index NASDAQ Index

Revenue Multiple Trends Sector and Sub Sector Revenue Multiples

3.0x 3/31/2020 3/31/2019

2.5x Communications Service Provider 2.5x 2.7x Large Cap 2.4x 2.5x 2.0x Alternative Telecom 4.3x 5.0x 1.5x Hosted and Managed Services 7.6x 8.6x

1.0x ILEC and Diversified ILEC 1.7x 1.7x Cable and Video 2.5x 3.1x 0.5x

0.0x

Enterprise Value/Revenue

EBITDA Multiple Trends Sector and Sub Sector EBITDA Multiples

10.0x 3/31/2020 3/31/2019 Communications Service Provider 7.2x 8.0x 8.0x Large Cap 6.7x 7.2x 6.0x Alternative Telecom 9.6x 11.9x Hosted and Managed Services 120.5x 78.8x 4.0x ILEC and Diversified ILEC 5.0x 5.2x

2.0x Cable and Video 8.0x 9.8x

0.0x

Enterprise Value/EBITDA

Source: Capital IQ

4 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro U.S. Communications Service Provider Stocks: M&A Summary

M&A to rural areas. Over time, we expect this portion of the In many respects the level of M&A activity in the Com- Alternative Telecom sub sector to make a more meaning- munications Service Provider sector over these past three ful contribution to deal activity. Of course, the market for months was highly respectable. We counted a total of 20 fiber-based service providers also remained active with five transactions this period for a total announced transaction transactions in that areas as well. Fatbeam picked up a dollar volume of $3.1 billion. The number of announced new private equity backer in SDC Capital Partners, while transactions was higher than we typically see, and it was Everstream, Communications and FirstLight particularly interesting to see that six of these transactions Fiber all continued their acquisitive ways. Finally, we noted were announced in March after the public markets had that MetroNet Fiber made a sizable acquisition of Jaguar started to unravel. However, with respect to dollar volume, Communications, a company with more than 2,000 miles the amount for this period was in many respects “bor- of fiber in southern Minnesota. rowed” from Q4 2019 because $2.9 billion came from a public company that switched acquirers after it received a Hosted and Managed Services superior competing offer. While we expect that companies We had a pair of transactions in the Hosted and Managed in the Communications Service Provider sub sector will Services sub sector this period. The most notable of these fare better than most in the current economic climate, it was the establishment of a new private equity-backed remains to be seen if M&A activity will remain at the cur- company in the cloud communications space with the rent relatively high level. acquisition of Cytracom by Sverica. Cytracom focuses on providing unified communications solutions exclusively Alternative Telecom for the Managed Service Provider channel. In the second The Alternative Telecom sub sector accounted for 11 of transaction, nexVortex sold its hosted voice business to our 20 transactions, or slightly more than half. The most Florida-based hosted communications company 4Voice. interesting trend we noted was a sharp pick up in the number of transactions for companies that offer fixed ILEC and Diversified ILEC wireless internet services. There were five transactions The ILEC and Diversified ILEC sub sector was another involving these companies this period, including a pair of area that was relatively active this period. The sub sector’s transactions inked by Watch Communications. FOCUS marquee transaction was the emergence of Macquarie has been seeing increasing interest in the fixed wireless Infrastructure Partners as the ultimate winner of the bid- space, particularly as many of these companies have suc- cessfully accessed government funds to bring broadband continued on page 6 > U.S. Communication Service Provider Sector: M&A Summary

M&A Activity: Number of Transactions M&A Activity ($ Value of Transactions in Millions)

100 $50,000.0 $46,335.1

83 77 80 74 $40,000.0 66

60 $30,000.0 $24,123.4

40 $20,000.0 $17,205.5

20 20 $10,000.0 $2,467.2 $3,072.0

0 $0.0 2016 2017 2018 2019 Through 2016 2017 2018 2019 Through 3/31/2020 3/31/2020

www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 5 ding war for publicly traded Cincinnati Bell. The winning RCN Corporation acquired EnTouch, a competitive cable bid valued the company at $2.9 billion, or nearly $300 company serving the Houston market, while Cogeco Cable million higher than the original deal with Brookfield Infra- acquired competitive operator Thames Valley Communica- structure Partners. In a much smaller transaction, Blue tions based out of Groton, Connecticut. Earth Valley Communications acquired fellow Minnesota ILEC Lonsdale Telephone Company. Transactions with Announced Multiples The only transaction with an announced multiple this Cable and Video period was the re-trade of the Cincinnati Bell deal. Mac- Activity picked up significantly in the Cable and Video sub quarie Infrastructure Partners ended up winning this deal sector as we counted five transactions this period. Mas- at multiples of 1.9x revenue and 7.3x EBITDA. This com- sillon Cable TV, Altice and Comcast all made “tuck-in” pares to multiples for the original Brookfield deal of 1.7x acquisitions of incumbent cable providers. In addition, revenue and 6.8x EBITDA.

M&A Announced Transactions (10/1/19 – 3/31/20)

Date Purchase Acquiror Target Sector Description Announced Price Massillon Cable TV Bellaire Television Cable and Video 3/24/20 NA Provides internet and cable TV services in Belmont County, . Cable IDEATEK TELCOM BTS Advanced Alternative Telecom 3/23/20 NA Provider of internet services. Communications Service Providers Omaha Fibaire Alternative Telecom 3/10/20 NA Broadband internet services and voice over internet protocol Corporation Communications Service Providers telephone services. MetroNet Fiber Jaguar Alternative Telecom 3/9/20 NA 2,000 mile fiber optic network throughout southern Minnesota Communications Service Providers that serves both residential and commercial customers. Macquarie Cincinnati Bell Diversified ILEC 3/5/20 $2,922.0 Diversified and technology services for Infrastructure residential and business customers. Partners 4Voice nexVortex (Hosted Hosted and Managed 3/3/20 NA Delivers hosted voice solutions to small and medium-sized Voice Business) Telecom Services businesses. Sverica Cytracom Hosted and Managed 2/27/20 NA Cloud-based unified communications software and solutions Telecom Services built exclusively for the Managed Service Provider channel. Everstream Rocket Fiber Alternative Telecom 2/26/20 NA Fiber optic network and managed services for small businesses Solutions Service Providers including networking, colocation and unified communications. Watch Q Wireless Alternative Telecom 2/25/20 NA Broadband internet services for customers in western Communications Service Providers and southeast utilizing fixed point wireless technology. RCN Corporation EnTouch Cable and Video 2/21/20 NA Broadband internet service, phone, TV and related home security monitoring services in the Greater Houston area. Altice Cable Cable and Video 2/12/20 $150.0 Regional cable operator serving markets in . FirstLight Fiber PrimeLink Alternative Telecom 2/11/20 NA Provides fiber optic internet and phone services for homes and Service Providers offices in upstate . Rural Southern Broadband Alternative Telecom 2/4/20 NA Rural fiber and wireless internet service provider serving the Telecommunications Service Providers southeast coastal areas. of America Hargray Electronet Broadband Alternative Telecom 2/3/20 NA Fiber-based broadband communications company based in Communications Communications Service Providers Tallahassee, Florida offering internet, hosting and phone services. SDC Capital Fatbeam Alternative Telecom 1/28/20 NA Fiber infrastructure services to enterprise, education, healthcare, Partners Service Providers government and carrier customers in the western . Blue Earth Valley Lonsdale Telephone Diversified ILEC 1/14/20 NA Voicemail, telephone, high-speed internet, television Communications Company programming and fiber-optic network services. Cogeco Cable Thames Valley Cable and Video 1/10/20 NA Provides broadband internet, cable and phone services to Communications businesses and consumers in southeastern Connecticut. Watch Sitco Internet Alternative Telecom 1/7/20 NA Provider of fiber and fixed-wireless broadband solutions based in Communications Service Providers Evansville, Indiana. Comcast Southern Vermont Cable and Video 1/5/20 NA Incumbent cable service provider operating in southern Vermont. Cable Company InfoWest American Wireless Alternative Telecom 1/2/20 NA Internet services to residents and businesses in the St. George, Service Providers Utah area. 3E8 Broadband Fusion Media Cable and Video 12/17/19 NA Provides internet, and telephone services. Solutions Bluebird Network Network Alternative Telecom 12/10/19 NA Provides internet and fiber transport network solutions in Alliance Service Providers Illinois.

6 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro M&A Announced Transactions (10/1/19 – 3/31/20) continued

Date Purchase Acquiror Target Sector Description Announced Price Ubiquity Partners Netly Alternative Telecom 12/10/19 NA City-wide, open-access fiber network for Solana Beach, Service Providers California and surrounding areas. Segra North State Diversified ILEC 12/9/19 $240.0 Fiber-based internet services including telephone, broadband Communications internet and cable TV for businesses and consumers. AppSmart Converged Network Alternative Telecom 12/6/19 NA Master agent for the design and delivery of commmunications Services Group Service Providers and technology solutions. BCM One Arena One Hosted and Managed 12/5/19 NA Facilities-based provider of Unified Communications as a Telecom Services Service using the BroadWorks platform. Barings GigaSphere Alternative Telecom 11/13/19 NA Provides fiber-based internet and networks to the multifamily Service Providers and commercial industries. Parity Technology Liveport Alternative Telecom 11/7/19 NA Wireless internet access systems, in-room entertainment Solutions Service Providers and smart home technology for hotels and student housing businesses. Uniti ANS Alternative Telecom 11/7/19 $6.3 Owns and operates an 85 mile last mile fiber network across Service Providers Georgia. Tucows Cedar Holdings Group Alternative Telecom 11/1/19 $11.0 Builds fiber to enterprise, anchor institution and residential Service Providers customers in Colorado and New Mexico. Oaktree Capital Cloud5 Alternative Telecom 10/22/19 NA Provides SIP trunking and hosted PBX services to the Management Communications Service Providers hospitality sector. Sangoma VoIP Innovations Hosted and Managed 10/18/19 $36.0 Provides wholesale VoIP and termination services and related Technologies Telecom Services communications platform-as-a-service for developers and enterprises. Mecklenburg Buggs Island Telephone Diversified ILEC 10/16/19 NA Provides communications services and products along with the Electric Cooperative latest wireless technology in south central . Comcast Epproach Alternative Telecom 10/15/19 NA Provider of WiFi and Internet services based in Wilmington, Communications Service Providers North Carolina. Baymark Partners Slappey Alternative Telecom 10/14/19 NA Communications, data, networking and security services for Communications Service Providers business customers. EATELCORP PremierOne.com Alternative Telecom 10/1/19 NA Internet service provider based in Louisiana. Service Providers Everstream DataBank (LightBound Alternative Telecom 10/1/19 NA Fiber telecommunications services to businesses in the Solutions Fiber Assets) Service Providers Indianapolis market.

M&A Announced Transactions with Revenue Multiples (4/1/19 – 3/31/20)

Date Purchase Revenue EBITDA Acquiror Target Sector Description Announced Price Multiple Multiple Macquarie Cincinnati Bell Diversified ILEC 3/5/20 $2,922.0 1.9 x 7.3 x Diversified telecommunications and technology Infrastructure services for residential and business customers. Partners Segra North State Diversified ILEC 12/9/19 $240.0 1.7 x 8.2 x Fiber-based internet services including Communications telephone, broadband internet and cable TV for businesses and consumers. Sangoma VoIP Innovations Hosted and Managed 10/18/19 $36.0 1.9 x 6.4 x Provides wholesale VoIP and termination Technologies Telecom Services services and related communications platform- as-a-service for developers and enterprises. Telephone & Data Continuum Cable and Video 8/13/19 $80.0 3.8 x NA North Carolina-based Internet, video and Systems Communications voice operator owned by the municipalities of System (Cable Mooresville and Davidson. and Broadband Assets) WaveDivision Frontier Diversified ILEC 5/29/19 $1,352.0 2.2 x 5.0 x Communications services to consumer, Capital and (Operations in commercial and wholesale customers in Searchlight Washington, Washington, Oregon and Idaho. Capital Partners Oregon, Idaho and Montana) Digital Colony Zayo Group Alternative Telecom 5/8/19 $14,258.9 5.5 x 12.0 x Provides bandwidth infrastructure solutions Partners and EQT Service Providers for the communications industry in the United Infrastructure States, Canada and Europe. Cable One Fidelity Cable and Video 4/1/19 $525.9 NA 11.7 x Cable operator serving customers in Arkansas, Communications Illinois, Louisiana, Missouri, Oklahoma and Texas.

www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 7 Sub Sector Analysis: Large Cap

Twelve Month Index Returns Company Returns

150.00 12 Month 3 Month Large Cap Index -8.5% -19.6%

100.00 AT&T -7.0% -25.4% CenturyLink -21.1% -28.4% Verizon -9.1% -12.5% 50.00

0.00

Large Cap

Revenue Multiple Trends Company Revenue Multiples

3.0x 3/31/2020 3/31/2019 Large Cap Index 2.4x 2.5x AT&T 2.2x 2.4x 2.0x CenturyLink 2.0x 2.1x Verizon 2.7x 2.7x

1.0x

0.0x

Enterprise Value/Revenue

EBITDA Multiple Trends Company EBITDA Multiples

10.0x 3/31/2020 3/31/2019 Large Cap Index 6.7x 7.2x 8.0x AT&T 7.7x 7.2x 6.0x CenturyLink 5.1x 5.4x Verizon 7.4x 7.4x 4.0x

2.0x

0.0x

Enterprise Value/EBITDA

Source: Capital IQ

8 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro Sub Sector Analysis: Alternative Telecom

Twelve Month Index Returns Company Returns

150.00 12 Month 3 Month Alternative Telecom Index -23.3% 1.9%

100.00 Boingo -54.4% -3.1% Cogent Communications 51.1% 24.6% GTT -77.1% -30.0% 50.00 Uniti -46.1% -26.6%

0.00

Alternative Telecom

Revenue Multiple Trends Company Revenue Multiples

8.0x 3/31/2020 3/31/2019 Alternative Telecom Index 4.3x 5.0x 6.0x Boingo 2.2x 4.1x Cogent Communications 8.3x 5.9x 4.0x GTT 2.4x 3.4x Uniti 6.0x 6.9x 2.0x

0.0x

Enterprise Value/Revenue

EBITDA Multiple Trends Company EBITDA Multiples

15.0x 3/31/2020 3/31/2019 Alternative Telecom Index 9.6x 11.9x Boingo 7.9x 13.1x 10.0x Cogent Communications 24.6x 17.8x GTT 10.0x 15.6x

5.0x Uniti 8.4x 9.0x

0.0x

Enterprise Value/EBITDA

Source: Capital IQ

www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 9 Sub Sector Analysis: Hosted & Managed Services

Twelve Month Index Returns Company Returns

200.00 12 Month 3 Month Hosted & Managed Services Index 4.9% 3.1% 150.00 8x8 -31.4% -24.3% Bandwidth 0.5% 5.1% 100.00 j2 Global -13.6% -20.1% RingCentral 96.6% 25.6% 50.00 Twilio -30.7% -8.9% -28.0% -2.4% 0.00

Hosted & Managed Services

Revenue Multiple Trends Company Revenue Multiples

12.0x 3/31/2020 3/31/2019

10.0x Hosted & Managed Services 7.6x 8.6x Index 8.0x 8x8 3.8x 5.4x

6.0x Bandwidth 6.1x 7.1x j2 Global 3.4x 4.2x 4.0x RingCentral 20.5x 12.7x 2.0x Twilio 10.0x 24.1x

0.0x Vonage 1.9x 2.8x

Enterprise Value/Revenue

EBITDA Multiple Trends Company EBITDA Multiples

200.0x 3/31/2020 3/31/2019 Hosted & Managed Services 120.5x 78.8x 150.0x Index 8x8 NM NM

100.0x Bandwidth NM 122.5x j2 Global 9.0x 11.2x

50.0x RingCentral 3788.4x 1251.8x Twilio NM NM

0.0x Vonage 24.5x 22.1x

Enterprise Value/EBITDA

Source: Capital IQ

10 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro Sub Sector Analysis: ILEC & Diversified ILEC

Twelve Month Index Returns Company Returns

150.00 12 Month 3 Month ILEC & Diversified ILEC Index -39.2% -20.5%

100.00 Systems -9.4% -1.7% Consolidated Communications -58.3% 17.3% Cincinnati Bell 53.5% 39.8% 50.00 Frontier -80.9% -57.3% Otelco -71.3% -52.9% Telephone & Data Systems -45.5% -34.1% 0.00

ILEC & Diversified ILEC

Revenue Multiple Trends Company Revenue Multiples

3.0x 3/31/2020 3/31/2019 ILEC & Diversified ILEC Index 1.7x 1.7x Alaska Communications Systems 1.4x 1.1x 2.0x Consolidated Communications 2.0x 2.2x Cincinnati Bell 1.9x 1.8x

1.0x Frontier 2.1x 2.0x Otelco 1.3x 1.9x Telephone & Data Systems 1.1x 1.1x 0.0x

Enterprise Value/Revenue

EBITDA Multiple Trends Company EBITDA Multiples

8.0x 3/31/2020 3/31/2019 ILEC & Diversified ILEC Index 5.0x 5.2x 6.0x Alaska Communications Systems 5.3x 4.5x Consolidated Communications 5.8x 6.7x 4.0x Cincinnati Bell 7.4x 7.2x Frontier 5.3x 5.0x 2.0x Otelco 3.7x 5.0x Telephone & Data Systems 5.0x 5.3x 0.0x

Enterprise Value/EBITDA

Source: Capital IQ

www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 11 Sub Sector Analysis: Cable & Video

Twelve Month Index Returns Company Returns

150.00 12 Month 3 Month Cable & Video Index -12.4% -23.6%

100.00 Altice 3.8% -18.5% Cable One 67.5% 10.4% Charter Communications 25.8% -10.1% 50.00 Comcast -14.0% -23.5% Dish Network -36.9% -43.6% WOW -47.7% -35.8% 0.00

Cable & Video

Revenue Multiple Trends Company Revenue Multiples

4.0x 3/31/2020 3/31/2019 Cable & Video Index 2.5x 3.1x 3.0x Altice 3.9x 3.9x Cable One 9.5x 6.1x 2.0x Charter Communications 4.1x 3.6x Comcast 2.4x 3.1x 1.0x Dish Network 1.8x 2.1x WOW 2.4x 2.6x 0.0x

Enterprise Value/Revenue

EBITDA Multiple Trends Company EBITDA Multiples

12.0x 3/31/2020 3/31/2019

10.0x Cable & Video Index 8.0x 9.8x Altice 9.2x 9.1x 8.0x Cable One 20.5x 13.5x 6.0x Charter Communications 11.3x 9.9x

4.0x Comcast 7.8x 9.7x Dish Network 8.9x 9.9x 2.0x WOW 7.1x 8.0x 0.0x

Enterprise Value/EBITDA

Source: Capital IQ

12 www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro FOCUS Telecom Technology and Services Team

Richard H. Pierce David Freeland Managing Director and Telecom Managing Director, Technology and Services Team San Francisco, California Leader, Washington, DC [email protected] [email protected] 978-505-1837 202-470-1983 David Freeland, a FOCUS Manag- Rich Pierce has 20 years of invest- ing Director, has more than fifteen ment banking experience advising years of experience providing invest- middle market clients on a variety of mergers and acqui- ment banking and management consulting services to a sitions and capital raising transactions. During that time, variety of corporate clients, ranging from the Fortune 500 Mr. Pierce’s primary emphasis has been on serving clients to start-up businesses. He has been an investment banker in the telecommunications industry including providers of since 2003, advising clients on mergers and acquisitions network related hardware and software products, wireless and capital raising transactions. Mr. Freeland has broad and wireline telecommunications service providers and - experience in the telecom and technology industry and has work engineering and construction companies. significant experience with data center companies.

About FOCUS Investment Banking LLC With more than three decades of experience, FOCUS Investment Banking is a trusted name in M&A advisory ser- vices worldwide. FOCUS works to understand each client’s strategic and financial objectives, craft the best plan to achieve these goals, and deliver success. Whether helping to sell, buy, or raise capital, FOCUS strives to maximize the value of every transaction to the benefit of its clients. FOCUS bankers are seasoned operating and financial executives with extensive transaction experience. Securities transactions conducted by FOCUS Securities LLC, an affiliated company, registered Broker Dealer member FINRA/SIPC. For more information on FOCUS, please visit www.focusbankers.com. © 2020 FOCUS Investment Banking LLC

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www.focusbankers.com /telecom | Atlanta • Los Angeles Metro • Washington, DC Metro 13