#1UT UTStarcom Holdings Corp Investor Presentation 000 2245 04 NASDAQ: UTSI September 2015 <-322 346 000 900 600 000 403 300 UTSTARCOM#2UT Disclosure & Forward Looking Statements This investor presentation contains forward-looking statements, including statements regarding the Company's expectation regarding its strategic initiatives and business outlook. Forward-looking statements are based on current expectations, estimates, forecasts and projections about the Company, the Company's future performance and the industries in which the Company operates as well as on the Company management's assumptions and beliefs. These forward-looking statements are only predictions and are subject to risks and uncertainties that may cause actual results to differ materially and adversely from the Company's current expectations. These include risks and uncertainties related to, among other things, changes in the financial condition and cash position of the Company, changes in the composition of the Company's management and their effect on the Company, the Company's ability to realize anticipated results of operational improvements and benefits of the divestiture transaction, successfully operate and grow its services business, execute its business plan and manage regulatory matters, as well as the risk factors identified in the Company's latest Annual Report on Form 20-F, and Current Reports on Form 6-K, as filed with the Securities and Exchange Commission. We undertake no obligation to update these forward-looking statements to reflect events or circumstances occurring after the date of this investor presentation. The Company is in a period of significant transition and the conduct of its business is exposed to additional risks as a result. 2#3UT Investment Highlights UT Leading Packet Optical Transport, Carrier Wi-Fi and SDN provider with global presence and multiple blue chip carrier customers UT Long-term partnerships with the Tier one carrier in Japan UT Proven portfolio of innovative solutions that help operators to quickly launch new services while also reducing Opex and Capex UT Best-in-class product quality attributable to proven in-house R&D and manufacturing capabilities UT Well-positioned to benefit from the disruptive changes of global telecom industry UT Experienced management team with a successful commercialization track record 3#4UT Growth Strategy UTStarcom has four core strategies to drive future growth Maximize Broadband Growth and Grow with Existing Customer Globally Monetize Investment in New Media Future Growth Strong R&D and Continue to Improve Operating Efficiency Broader Sales Network 4#5UT Overview of Key Products 100G Packet Optical Transport Global spending on Carrier Ethernet Switches: In 2013: $2.9B By 2018: $3.7B (projected) Integrated Carrier Wi-Fi Global spending on Carrier Wi-Fi equipment: In 2014: $704M By 2018: $3.0B (projected) UT UT UT UT Nearly 20,000 nodes have been deployed Flagship 100G TN765 field deployed in 2015. Rich SDN functionalities including L3VPN and uFlex BoD MSG10K can support 120,000 access points(AP) Commercial deployment managing over 500,000 AP in Japan T50% data traffic can be offloaded from 3G/4G Revolutionary SDN Platform Global spending on SDN: In 2013: $1.5B By 2018: $35.6B (projected) Sources: Infonetics, SDNCentral, Plexxi, and Lightspeed Venture Partners UT Layer3 VPN solution with SDN/NFV enabling - launched in 2015 Provisioning of pre-planned bandwidth on demand: uFlex BoD product launched in 2015 At the forefront of SDN development: SOOTM SDN controller launched in 2014 and POC completed in Japan in early 2014 5#6UT Product Portfolio SIMPLE NETWORK, SIMPLE OPERATION SDN & Network Management SDN product Line: SOO (Software Defined Open Packet Optical) Network • SOO Station: SDN Sub/Central Controller • SOO Store/Design/Care: SDN Apps Automation, BoD, Centralized L3 NETWORK SOO Packet Optical Transport • • • Packet Optical Transport Network MPLS-TP & CE Complete product family from Metro Access and Aggregation to Core Network Large scale deployments for Tier 1 telecom operators Open Platform: Open Southbound I/F managing 3rd party systems Open Northbound CORBA I/F and API for integration Centralized network and element management solution Advanced GUI-based network management with end-to-end service provisioning High scalability and reliability Broadband Access Wireless BB access solution Complete Carrier-class Wi-Fi solution: AP & AC, AAA, Billing, Policy, QoS, Portal etc. Mobile data offloading Fixed-line BB access solutions MSAN, EAD and FTTx PON · . Over 40M access lines deployed Services Professional services: planning, deployment, maintenance, technical support, project management etc. Large-scale deployments for IP-DSLAM, MSTP, MSAN, PON & Packet Optical systems and networks#7UT CPE/Edge Access 1U L2/3 Q3-15 TN703A 64Gbps SW GE/XGE Packet Optical Transport Products Portfolio Aggregation/Core 7U 18U L2/3 TN735 9U 100G TN765 960Gbps SW 1/10/100GE 10G POS • SDN/NFV NETWORK SOO SOO Network SOO Station: Centralized SDN Controller • Automated E2E service provisioning Bandwidth on demand (BOD) • Centralized L3 function SOO App: In-house and 3rd party apps for customer management, network design, maintenance, deployment etc. NMS ----. L2/3 TN701B 10Gbps SW GE SFP/RJ45 Indoor/Outdoor TN701A 4.4Gbps SW E1/STM-1 1U TN703E 44Gbps SW FE/GE/XGE E1/STM-1 10 TN703C 6.4Gbps SW GE SFP/FE RJ45 FE/GE/E1 Indoor/Outdoor Indoor/Outdoor 2U L2/3 Q3-15 TN704A 136Gbps SW GE/XGE E1/STM-1 3U TN705 88Gbps SW 2.5/10G POS FE/GE/XGE E1/STM-1 TN725E 176Gbps SW FE/GE/XGE E1/STM-1 7U TN725 108Gbps SW 2.5/10G POS FE/GE/XGE E1/STM-1 400Gbps SW 10GE/10G POS FE/GE E1/STM-1 000 CL-ALM CLK-ACT CLK-RUN TN701 TN703 TN704 TN705 TN 725 TN735 TN765 • • Netman 6000 OMC-O Centralized network and element management Intuitive GUI-based network management End-to-end service provisioning Highest scalability and reliability, DB Redundancy •Integrated with SDN solution SOO Network Network Intelligence#8UT Packet Optical Transport - 100G TN765 ➤ Flag ship product for TN series ➤ Support of 100GE transmission High capacity: 1Tbps Full-Duplex redundant MPLS Switching, up to 1.28Tpbs interfaces capability ➤ SDN-enabled device, support of L3VPN ➤ High port density: up to 96 x 10GE ports. Integrated WDM & 10Gbps Tunable Laser NetRing TN765 8 E#9UT SOO Platform - Transport SDN SDN Product Line: "SOO(Software Defined Open Packet Optical) Network" 3rd Party Apps STATION SOO "SOO APP": In-house/3rd party applications In house apps for customer/manager service ordering, network design etc. - Open & standard interface for 3rd party's APPS integration "SOO Station": SDN Controller - - Centralized SDN Controller Open APIs for vertical integration of applications - End-to-end automated service provisioning - Path computing and management - Advanced services including Bandwidth on Demand, L3VPN "SOO Device": SDN-ized Network Devices - Controlled by SOO Station NetRing series PTN products#10UT Outstanding Manufacturing & Quality Assurance Capabilities ✓ Over 20 years manufacturing experience ✓ Focus on telecom equipment ✓ Comprehensive manufacturing capabilities: • • • • From PCB Assembly To MEC Assembly To System Integration From NPI (New Products Introduction) To MP (Mass Production) SMT, THT (PTH), MEC Assembly, Micro BGA, CSP,0201 BGA Rework and Re-Balling ✓ The highest quality standards, comprehensive quality control • • • Comprehensive quality control process, certified by LRQA for ISO9001/14001, OHSAS 18001,QC080000 Quality centric culture, implement "Kaizen" supervised by Japan customer and partner Field proven, hardware failure rate less than 0.05% per month ✓ Green, environment friendly, employee care CE This is to certif UTSt Building 24 No. 1576 C Hang Peo has been appr to the followin The Quality Design, manufa communication video and int Desi Co Approval Certificate No: GAC001104 CERTIFICA This is to certify that the Er UTStarcon Building 2# and No. 1576 Chunb Hangzhou, People's I has been approved by to the following Environm ISC GB/ The Environmental Ma Design, manufacture an communication syster video and internet ac Design and service of Approval Certificate No: QAC00531038 IEC QUALITY ASSESSMENT SYSTEM (IECQ) orvering Electronic Components. Assemblies Related Materials and Processes IECQ Certificate of Conformity Hazardous Substance Process Management IEC ECO а This is to c UTS Building 2 No. 1576 Hani Pe has been approved by Occupational Hel The Occupational He Design, manufac communication video and inte Design and se Approval 800 Co Spese BOG-HLLOYDSTW 110000 CB Cartial Number PC HP 197 Applicable! Dieta Current Del 2011/13/15 Og lave 2018 2018/na Euran Directive 200296EC RHS) mers UTStarcom Telecom Co., Ltd No 157 CHUNKO ROAD LETE HOH TECH PARK, BOLAN DISTRICT MANGZHOU 3002, SHEANG The organizationsloped and implemented Hazardous Substance Process Management procedures and related processes which have been assessed and bunt to comply with the applicable requirements for IEDO HOPM organization approval which is incordance with the Best Rules ECO 01 and Rules of Procedure ECO 03 ECO Hardous Substances Process Management of the IEC Quality Asement System for Electonic Components (ECG), and with spect to the ECQ Speuficator QC 00000 Design, manufacture and service of wireless and visi okters and forced, and in aces and brain serves Certificate No: QAC00530 Certed by the Certification (0) Calon Baly Spain Isued kundi sued by boyd) for an for and for and on bellà 60 50 50 10 40 No of Failure B (ECCC (R) Loyd's Register inspection Ltd Taiwan Branch Authored Kuo-PasHang Bectonic Components Certfication Corporation Failure Qty&Rate 45 40 49 41 Mind 7970 UNITED STATES Wish the ve 0.045 0.04 46 0.035 0.03 0.025 0.02 0.015 SMT3 SMT Assembly Line CSC测试一线 CSC Test First Line 60 55 ® གླ སྠཽ གྷུ ༄ ཀྵུ བྷུ ཀྵུ ༞ གྲྀ ཋ ག་ 25 0 04-2013 05-2013 06-2013 07-2013 08-2013 50 48 49 45 46 47 45 45 42 42 38 38 36 35 3435 36 27 _ CISCO故障件数 W UTS故障件数 CISCO -UTS故障率 09-2013 Date 0 0.20 56 0.15 $9 32 27 0.10 1515 121 0.05 0.00 0.01 0.005 Failure Rate, %#11UT Japan ➤ Softbank ➤ NEC Multiple Tier-1 Carrier Customers Taiwan ➤ Taiwan Chunghwa Telecom India around 35% broadband market share - BNSL Reliance ➤ Tata Bharti Southeast Asia ➤ Telkomsel, Indonesia ➤ Banglalion, Bangladesh Brazil ➤ Oi Korea ➤ Key Partner Dasan Networks, who also holds our 5% shares Latvia ➤ LMT USA In pursuit of US telecom carriers and cable MSO 11#12UT Book Value of Our Investments Unit: US$ in millions UiTV UTSI's Holding % Values on Book 49% 13.4 aioTV 44% 8.0 VGL 75% 2.5 Others N/A 21.5 Total N/A 45.4 12#13UT UiTV, Inc. Overview Founded in 2010, UiTV is dedicated to pioneering the transition of traditional telecom networks to advanced triple-play entertainment services providers by delivering all-digital, high definition, intelligent, and interactive television services. In partnership with TOT, the largest telecom carrier in Thailand, UiTV, through its subsidiary MeTV in Thailand, currently operates a multi-screen, 160 channels, nationwide IPTV service in Thailand. UiTV plans to replicate this business model to other broadband service providers in Thailand and other APAC countries. UTStarcom owns 49% of UiTV. uitv CNBC Diversified Content Discovery ESPNHD NATIONAL GEOGRAPHIC CHANNEL FOXMOVIES HBO CNN MVL SKY NEWS HD Competitive Advantages UiTV Media secured a ground-breaking contract win, its first in Mainland China. UiTV launched several key advance features in its technology platform, including 4k video support as well as network based DVR. UiTV is a multichannel service provider and is unique because UiTV owns the whole suite of platform technology that allows it to offer the best quality of service with unmatchable user experience. While most of the service providers have to rely on third parties to build their platforms, UiTV can improve its platform on a continued basis and thus, stay ahead of the curve. The average viewing time for MeTV service in Thailand is up to the 5+ hours/day range, much higher than the Thailand average of 2hr 11 min as reported by Neilson in 2010. low average churn rate for MeTV service is 0.7%, far below 2% industry average. TOT covers 5+ million households in Thailand starting 2013, which will be huge potential customer base for MeTV. 13#14UT aioTV, Inc. aiotv Overview aioTV is a platform and provider of back-office tools that enables video service providers to easily aggregate, authenticate and deliver multiple sources of IP, live, on-demand and freely available video content directly to the customer in a single, branded experience to the TV and across connected devices. UTStarcom owns 44% of aioTV. Competitive Advantages & Awards aioTV signed an agreement with a large cable operator in the US that has launched an OTT kids service nationwide. In May, 2015, aioTV received the US patent for metadata normalization & playback and two US patents granted in Sept, 2014, for unifying multiple sources of video content in a single experience aioTV was named amongst the hottest emerging players in the online video market in 2015 by Fierce Online Video CEO Michael Earle was named to Cable FAX 2014 Digital Hot List which showcases those who have demonstrated innovation and progress digital media. Market Opportunity Video as a percentage of total global consumer Internet traffic will go from 56.5% in 2012 to 69% in 2017 (Source: Cisco Visual Networking Index, May 2013) Global rate of OTT capable devices forecast to grow to from 1.7B to 2.7B by 2017 (Source: HIS, Consumer Electronics Topical Report, December 2013) Frequent M&A in this segment indicating OTT video platform is highly in pursuit World Class Proprietary Publishing Platform CAN CBS бос f CBS hulu NETFLIX Empowering Media Brands Innovative operators create media brands that connects content with online audiences using aioTV orchestration and curation tool sets Cuyte YiP LOOKHU™ flarekids 14#15UT Virtual Gateway Labs (VGL) t Д Virtual ateway Labs Overview Founded in 2015, VGL develops next generation products that allow seamless access and aggregation at the edge of the network. UTStarcom owns 75% of VGL. Products VGL offers broadband gateway products that implement the next generation deployment model by which the communication provider and the municipality would be deploying a base service network to provide bandwidth and emergency supports. Additional services such as TV programming, home monitoring, etc., will be deployed and can be offered by a third party vendor without being handled by the offering carrier, which typically aims at 3rd tier to some 2nd tier local and regional carriers. Home gateway deployment: a simple Active Ethernet outdoor-mountable gateway with SFP-based 1G optical Ethernet uplink with 4 x 10/100 RJ-45 down links. The unit also supports 2xVoIP FXS ports for land line home phones. The gateway is powered by a battery backup pack and a 12V DC power source. Market Opportunity VGL's platform will help fuel tomorrow's open access network when broadband will be more than just the Internet, and offering a new variety of virtual services including: Emergency communications Interactive entertainment Home automation Smart grid Connected sensor systems 15#16UT Financial Overview 1. 1H15 non-GAAP revenue was $49.1 million 2. 1H15 non-GAAP gross margin was 15.4% 3. 4. 5. Enterprise value as of 9/2/15 was zero 1H15 adjusted EBITDA was negative $9.0 million As of 6/30/15, we maintained a solid balance sheet with $73.5 million in cash and no debt, and minimum CapEx to be incurred in the near term. 16#17UT Comparables Unit: US$ Unit: US$ As of 9/2/2015 Ticker UTSI CALX RKUS INFN CIEN Peer Avg Current Share Price 1.98 7.85 11.26 22.05 22.49 Market cap (Millions) 74 408 986 2893 2865 Cash 74 99 212 402 731 Debt 0 0 0 121 1307 Book value per share 2.95 5.02 3.24 4.12 1.30 Price-to-Book 0.67x 1.6x 3.5x 5.4x 17.4x 3.5x Enterprise Value 0 309 774 2612 3441 2016 Revenue 119 450 441 1066 2707 2016 Gross Margin (%) 27% 50% 69% 47% 44% 53% 2016 EBITDA 6.0 31 80 186 421 2016 EBITDA Margin 5% 7% 18% 17% 16% 14% EV-to-Revenue 0.0x 0.7x 1.8x 2.5x 1.3x 1.5x EV-to-EBIDA 0.0x 10.0x 9.7x 14.1x 8.2x 10.5× 17#18UT Outlook The Company expects non-GAAP revenue in the 3rd quarter of 2015 to be in the range of $18 million to $22 million. The Company is fully committed to broadband as the driver of our business and expect new higher quality and higher margin products sales continue to grow despite declines in carrier customer capital expenditure. Will focus only on high margin revenue in our broadband business, which will continue to be the key driver of our business globally. Will achieve a healthy geographic diversification. We are making significant progress in a diverse range of both established and emerging markets including Japan, U.S., LATAM, Bangladesh, Myanmar. The Company will maintain a tight focus on financial controls while supporting our business transformation. ❖ Will continue to add value to our strategic investments in UiTV, aioTV and a startup VGL in order to monetize these investments and generate a good return. 18#19UT Investor Relations Contacts For investor and media inquiries, please contact: UTStarcom Holdings Corp. Tel: +852-3951-9757 Fei Wang, Deputy Director, FP&A and IR Email: [email protected] Jiang Ning, Investor Relations Email: [email protected] 19