A brighter place for everyone An Introduc+on to TalkTalk Business February 2013 Chief Execuve 2 ! " Growing TalkTalk Business is an important element of our medium term 2% revenue and 25% EBITDA margin targets ! " £425m revenue business today, of which £315m Corporate and £110m basic business phone and broadband ! " Similar opportunity to grow revenue, simplify operaons and expand margin as in our Consumer business ! " Similar opportunity to leverage the cost and technology advantage of our network 3 Managing Director, TalkTalk Business 4 ! " £425m, scale business ! " The only B2B operator apart from BT, VMEd and C&W with significant network presence ! " 140,000 SoHo/SME customers ! " 1,400 mid-market and corporate customers ! " 750 Partners ranging from resellers to systems integrators ! " Key contributor to Group revenue and profits 5 Enterprise: Direct 2k+ e’ees Partner Channel Channel Mid Market: 250 – 2,000 e’ees SME: 10 – 250 e’ees SOHO: < 10 e’ees CONSUMERS 6 Voice Data Carrier Voice Over Ethernet IPVPN Networks Voice Interconnect Enterprise (VOE) Ethernet / EFM Wholesale Transit ISDN30 IPVPN Networks Mid Market Hosted Contact Centre Ethernet / EFM Hosted PBX Ethernet over Fibre (EoF) ISDN30 / ISDN2 EFM / EoF Hosted Contact Centre SME Fibre Hosted PBX Fibre Phone SOHO DSL (MPF / SMPF) 7 Local & naonal calls Contact Centre for SOHO and Small Mul+ple line services for SME and Mid Market specific services SME Call Bundles with Broadband Hosted PBX/UC Premise based NEW Next Gen Contact Voice over phone systems ISDN / SIP Manager Ethernet 8 Asymmetric, asynchronous, High speed Symmetric, synchronous, Contended, business SLAs, asymmetrical non-contended, business-grade SLAs, high speeds <2Mbps upstream MPF & SMPF Broadband Fibre EoF EFM 10 MB 100 MB Gig < £20 p.m. From From From From £25 p.m. £100 p.m. £350 p.m. £1,000 p.m. 9 By Channel* By Product* Carrier 14% Partner 50% Data 37% Direct Voice 50% 49% * 9m to 31st December 2012 10 Typical Competitors Customers Typical Partners Integrators Carriers Virgin Media BT Enterprise Cable & Wireless e.g. Daisy Mid Market ISPs e.g. XLN, O2, Chess, SME Resellers e.g. ZEN, NewCall, SOHO 11 Reach Product Innovation 95% coverage On-Net SIP & ISDN30 More Ethernet exchanges (30% cheaper than BT) than BT Wholesale FTTC – only scale alternative to BT Wholesale Service Quality Value For Money 6 Hour Fix on Fibre £10 business broadband Public sector certified Competitive ethernet Carrier / Enterprise grade pricing service model 12 ! " Large Direct customer base with up and cross sell potenJal ! " Vibrant Partner channel that scales quickly for revenue build ! " Legacy voice revenues in decline but momentum growing in a strong set of high margin data products ! " Opportunity to simplify operaons ahead of driving scale 13 ! " Significant opportuniJes through Partner channel and Direct Data ! " Only 10% of SME customers take our data products ! " ConJnued expansion of Ethernet products ! " Core revenue and new market growth Carrier ! " ConJnued expansion of internaonal trading ! " New opportuniJes in data Voice ! " Established declining trend in legacy voice ! " Growing selecJvely through next generaon ISDN and SIP proposiJons 14 Strong growth in high Making TalkTalk Simpler margin products ! "Broadband & Fibre vs Voice Improving customer Simpler systems ! "Ethernet family service and processes ! "New Next Gen Voice ! "Growth in new segments e.g. ! "Business and ! "InvesJng in online Enterprise grade integrators and public sector service model ! "Raonalising legacy products and systems ! "Consolidate service teams in Warrington ! "Fewer, beaer systems and Irlam ! "Closing Stoke Mandeville 15 16 ! " Network scale and design allows: ›" Product innovaon ›" Compeve pricing ›" Flexibility ! " A simplified and effecJve operang model: ›" Lower costs to serve as scale grows ! " The value player in the B2B market 17 Largest UK Operang Value for money Unbundled B2B Fibre Efficiencies quad play Network 2% REVENUE CAGR Base Growth Base Growth Data and Fibre demand from 20% of UK from lower Plus Mix Carrier grows with TV not online churn Base growth for TV Mobile + TV, Offnet decline content ARPU Legacy Voice 25% EBITDA MARGIN Growth in fully Making TalkTalk Lower SAC from Growing Data Lower costs to unbundled mix Simpler: lower churn services serve £30m-£50m Higher margin Declining lower Plus margin legacy Voice Investment in TV Content gross Lower gross network margin % margin % SAC to build TV and mobile 18 A brighter place for everyone February 2013 .