Macquarie Telecom : Investor presentation, 15 March 2017 (PDF)

Investor Presentation.‌‌‌‌‌‌‌‌‌‌‌‌‌‌

March 2017

2 Key Business Highlights.

• EBITDA CAGR of 19.4% over the last 3 years

• High cashflow conversion and zero debt

• A differentiated market offering across hybrid IT and telecom

• A high quality, diverse, corporate customer base with multi-year contracts

• Primary focus on customer service with Australia's leading net promoter score of +66

• Quality data centre infrastructure which enables operational leverage

• Exposed to the strong ongoing migration of business and government onto the cloud

3 Business Summary.

Business Areas

Percentage of Revenue & EBITDA in H1 FY17

67%

50%

33%

50%

What we do

For business, we are the full service provider of data, voice, mobile & colocation services. We are the telecom that does everything refreshingly different. We are where the Macquarie story started

For business customers we are the specialists in hybrid IT. We integrate colocation, cloud,

& dedicated servers. Different applications need different types of hosting.

We manage it

We are the Australian specialists in cyber security, secure cloud & colocation for Federal Government. We deliver services to 42% of Federal Government agencies

Control

Value proposition Customer Service, Price, Choice, Flexibility,

Customer Service, Specialised and Compliant Hosting. For apps not suitable for Public Cloud

Customer Service, SIG Accreditation, Cyber Security, ASD - Certified Cloud, Data Centre in Canberra

Competitors

People / Skill

Generalist for Voice & Mobiles TC for Data & CoLo

know Business Drivers

Hosting Specialists: Custom and Compliant Secure Hosting Specialist

know Government Drivers

4 High Quality & Diverse Corporate & Government Customers.

• Top 20 customers account for c. 20% of revenue in CY 2016

• Federal Government accounts for a quarter of these customers

• Most contracts are signed for 2 or 3 year terms

• Cross-selling of services increasing between the businesses - natural fit as hosting customers need telecom & vice versa

Cloud Services

Telecom

Government

A Differentiated Offering.

Macquarie Telecom Group | Investor Presentation

6 Customer focus… is delivering improved

performance.

• Our continued focus on providing a great customer experience is core to our service offering & differentiation

• Macquarie's net promoter score (NPS) is +66 for Q2 FY17 - Australian leading NPS

  NPS Q2FY17i

  Larger

  Telco Range

  Smaller Telco Range

  National Leaders (+45)

  -2 11 25

  45 58 66

• NPS is the measure of customer loyalty that is assessed on a scale of -100 to +100, where a score of greater than +50 is excellent

• NPS is calculated on the single question "how likely is it that you would recommend our company to a friend or colleague?"

• Growth in our NPS is good for our investors

  Key metrics since Q4FY14 to Q2FY17

  +38.4%

  NPS

  -18.5%

  Debtor DSO

  +2.7%

  Cross-sell

  +5.5%

  Customer retention

  Macquarie Telecom Group

  | Investor Presentation

• Source: The Customer Experience Company - Industry ranges from 'NPS Pulse Check' based on Q42016 - see http://customerexperience.com.au/nps-benchmark/

7 Market for Macquarie Cloud Services

& Government.

The market is moving to cloud both at the infrastructure as a service level where we operate and at a software as a service level. Macquarie competes at an infrastructure level and our customers are the software as a service clouds, as well as companies that run their own software but want a more reliable data centre than their office.

The Australian colocation market is estimated to be growing by 12% CAGR to

$2bn by 2021 (Frost & Sullivan 2016) & cloud market by 15% CAGR to 2019 (Gartner).

8 Macquarie Cloud Services Differentiation.

One stop shop for hybrid IT solution	Gartner estimate 58% of companies pursue a hybrid IT strategy The breadth of our product range sets us apart from our competitors: colocation, dedicated servers and private cloud Macquarie offers a unique level of accountability for the entire customer experience journey from commercials to service delivery, to integration and then support & billing
Custom and compliance	We specialise in customising the build for sophisticated customers to optimise performance of their software application We have invested in the most certified data centres & cloud platforms to make it easier for our customers in financial services & Government to comply with standards
Built on market leading technologies	It's easier for customers to migrate to us which means less risk, cost & time to do the re-platforming that public clouds require There are also deeper pools of skilled staff who manage these technologies Our cloud is built on market leading technologies such as Vmware, EMC and Cisco
Customer experience	Macquarie's net promoter score (NPS) is +66 for Q2 FY17 - Australian leading NPS

Often customers choose the public cloud for the front end of new websites & a place to store images. We are usually seen by our customers as complementary with public cloud, rather than substitutes.

9 Macquarie's Cloud Service Hybrid IT vs Public Cloud.

10 Macquarie Government Differentiation.

One stop shop for hybrid IT solution tailored for Government	This means we can offer a unique level of accountability for the entire customer experience journey from commercials to service delivery, to integration & then support & billing The breadth of our product sets us apart from our competitors: colocation to cloud
Cyber security	We provide cyber security services to protect agencies from attack (including protection from viruses & hackers). This protects the agencies systems & their cloud environments
Our cloud is built on market leading technologies	Our cloud is built on market leading technologies of EMC, Cisco and VMware & is certified by the Australian Signals Directorate (Department of Defence) As most Government agencies use these technologies, this means it's easier for them to migrate to us which means less risk, cost & time to do the re-platforming that public clouds require There are also deeper pools of skilled staff who manage these technologies
Customer experience	Macquarie's net promoter score (NPS) is +66 for Q2 FY17 - Australian leading NPS. The support is delivered by Australian engineers, of which over 100 are cleared by the Australian Government

Macquarie differentiates itself through its focus on cyber security & delivering Government security grade cloud & colocation solutions. We have 42% of the Australian Government as customers

11 Macquarie Government's Offering Cloud & Cyber Security focus.

Cyber Security

Secure Cloud

Network

12 Macquarie's Telecom Differentiation Mid market competitive landscape.

Macquarie Telecom Group

Price

| Investor Presentation

NPS

• The Company's differentiation in the corporate market is reinforced by its outstanding customer service experience & competitive pricing

• Macquarie Telecom's focus on customer service experience has been a major driving force behind its continued growth & market leading Net Promoter Score (NPS)

• Macquarie benefits from the migration to NBN

• We focus on the 5,500 mid-sized corporate customer market