#1UTAH INFRASTRUCTURE AGENCY (UIA) $48,350,000* Telecommunications Revenue Bonds, Series 2019 CREDIT SUMMARY OCTOBER 2019 *Preliminary, subject to change. 000 0000 0000 88 88 0000 0000 LAT 0000 田田 口 ww BUIA Utah Infrastructure Agency#2LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 TABLE OF CONTENTS DISCLAIMER INTRODUCTION SECTION I: SERIES 2019 BONDS SERIES 2019 BONDS USES. SECTION II: UTOPIA/UIA. OPEN-ACCESS FIBER OPEN-ACCESS ROADS. OPEN-ACCESS TRANSPORTATION INFRASTRUCTURE MUNICIPAL OPEN-ACCESS FIBER. UTOPIA/UIA..... OPEN INFRASTRUCTURE GROWTH IN FIBER UNDERSTANDING............ SECTION III: UTAH DEMOGRAPHICS AND ECONOMY. DEMOGRAPHICS. ECONOMY. UTOPIA/UIA FIBER BACKBONE. CITIES SERVED BY UTOPIA.. SECTION IV: UIA INFRASTRUCTURE CONSTRUCTION. INFRASTRUCTURE BUILD LOCATIONS DEPLOYED SECTION V: TAKE RATE STATISTICS RESIDENTIAL TAKE RATES. STRONG DEMAND... NON-RESIDENTIAL TAKE RATES SECTION VI: RECENT CONSTRUCTION AND COST INFORMATION INFRASTRUCTURE BUILT LOCATIONS DEPLOYED GROWTH FROM CONTINUED DEPLOYMENT. COST CONTAINMENT.... 3 4 7 7 7 8 10 || || 80 12 13 13 13 13 14 16 16 16 17 17 21 .24 .26 26 26 .26 .27 PAGE I WE PROVIDE SOLUTIONS#3LYRB PLANNED MAINTENANCE SCHEDULE. SECTION VII: DATA USAGE STATISTICS CONTINUED EXPANSION IN DATA USE BARRIERS TO ENTRY REMAIN HIGH FOR OTHER FTTH ENTITIES.. SECTION VIII: RESIDENTIAL AND COMMERCIAL COMPETITIVE LANDSCAPE... COMPETITION. SECTION IX: RESIDENTIAL AND COMMERCIAL MARKETING PLANS. BUDGET. STAFFING.. APPROACH... SUCCESS MEASURES SERVICE PROVIDERS LOW CHURN.. SECTION X: FINANCIAL MATTERS UIA FINANCIAL INFORMATION. MEMBER CITY FRANCHISE FEE INFORMATION.. SECTION XI: ONGOING NETWORK EXPANSION EXPANSION WITHIN MEMBER CITIES EXPANSION BEYOND MEMBER CITIES... SECTION XII: FUTURE PLANS FOR UTOPIA/UIA.... SUMMARY BUILDOUT FOR EXISTING MEMBER CITIES ADDITIONAL UTOPIA/UIA DEBT. PAGE 2 UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 .27 28 .28 28 .29 .29 99 31 .31 31 .32 33 33 .34 35 35 .39 559 .40 40 40 41 .41 41 WE PROVIDE SOLUTIONS#4LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 DISCLAIMER This electronic investor presentation that you are about to view is provided as of October 8, 2019 for a proposed offering of Telecommunications Revenue Bonds, Series 2019 (the "Bonds"). This presentation has been prepared for information purposes only and for your sole and exclusive use in connection with the proposed transaction. The information contained herein is subject to completion and amendment. Any offer or solicitation with respect to the Bonds will be made by means of a preliminary official statement or a final official statement. If you are viewing this investor presentation after the date stated above, events may have occurred that have a material adverse effect on the financial information presented and neither the issuer nor the underwriter have undertaken any obligation to update this electronic presentation. This investor presentation does not constitute a recommendation or an offer or solicitation for the purchase or sale of any security or other financial instrument, including the Bonds, or to adopt any investment strategy. You will be responsible for consulting your own advisors and making your own independent investigation and appraisal of the risks, benefits, appropriateness and suitability of the proposed transaction and any other transactions contemplated by this presentation and neither the issuer nor the underwriter is making any recommendation (personal or otherwise) or giving any investment advice and will have no liability with respect thereto. Neither the issuer nor the underwriter makes a representation or warranty as to the (i) accuracy, adequacy or completeness of any information in this investor presentation or (ii) legal, tax, credit or accounting treatment of any purchase of Bonds by you or any other effects such purchase may have on you and your affiliates or any other parties to such transactions and their respective affiliates. The information contained herein has been compiled from sources believed to be reliable, however neither the issuer nor the underwriter shall have any liability whatsoever (in negligence or otherwise) to any person for any loss arising from this investor presentation or any information supplied in connection therewith. This investor presentation contains "forward-looking" statements that involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, the results may differ materially from those expressed or implied by such forward-looking statements. Accordingly, we caution you not to place undue reliance on these statements. All statements other than the statements of historical fact could be deemed forward-looking. All opinions, estimates, projections, forecasts and valuations are preliminary, indicative and are subject to change without notice. Transactions involving the Bonds may not be suitable for all investors. You should consult with your own advisors as to the suitability of the Bonds for your particular circumstances. No assurance can be given that any transaction mentioned herein could in fact be executed. Past performance is not indicative of future returns, which will vary. Prospective investors should contact their salesperson at, and execute the transactions through an entity of the underwriter qualified in their home jurisdiction unless governing law permits otherwise. THE PRINTING, DUPLICATING, DOWNLOADING, SCREEN CAPTURING, ELECTRONIC STORING, RECORDING, PUBLISHING OR DISTRIBUTING OF THIS INVESTOR PRESENTATION IN ANY MANNER IS STRICTLY PROHIBITED. By viewing this investor presentation you acknowledge that you understand and agree to the provisions of this page. PAGE 3 WE PROVIDE SOLUTIONS#5LYRB INTRODUCTION MEETING ATTENDEES UTAH INFRASTRUCTURE AGENCY UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Roger Timmerman, Chief Executive Officer Laurie Harvey, Chief Financial Officer Kim McKinley, Chief Marketing Officer (801) 613-3800 (801) 613-3800 (801) 613-3800 LEWIS YOUNG Robertson & BURNINGHAM, Inc. (Financial ADVISOR) Laura Lewis, Principal KEYBANC CAPITAL MARKETS Inc. (SENIOR MANAGING UNDERWRITER) [email protected] [email protected] [email protected] [email protected] [email protected] (801) 596-0700 Thomas Coverick, Managing Director (312) 730-2715 Jerry Nowlin, Director (801) 297-5894 Eric Rex, Associate (216) 689-6492 CHAPMAN AND CUTLER (UNDERWRITER'S COUNSEL) Larry White, Partner (312) 845-3426 [email protected] [email protected] [email protected] PAGE 4 WE PROVIDE SOLUTIONS#6LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 EXECUTIVE STAFF BIOGRAPHICAL INFORMATION ROGER TIMMERMAN, CHIEF EXECUTIVE OFFICER, UIA Roger has been serving as UTOPIA Fiber's Executive Director since 2016 and has been a technology management professional in telecommunications and information technology for over 15 years. Roger has been designing and building networks throughout his career in various roles including Vice President of Engineering for Vivint Wireless, CTO for UTOPIA Fiber, Network Engineer for iProvo, and Network Product Manager for Brigham Young University. Roger earned his Bachelor of Science and Master of Science degrees in Information Technology from Brigham Young University. PAGE 5 LAURIE HARVEY, CHIEF FINANCIAL OFFICER / SECRETARY TREASURER, UIA Laurie has been with UTOPIA/UIA since January of 2019. Prior to joining the Agency, she was an Assistant City Manager for Midvale City, one of the Agency's member cities. She was employed by Midvale City for twenty years. Laurie also has served in the Utah Governor's Office of Planning and Budget, and has over ten years of experience in Public Accounting. She is a Certified Public Accountant and a Certified Public Finance Officer. She holds a B.S. degree in Accounting from the University of Utah. KIM MCKINLEY, CHIEF MARKETING OFFICER, UIA Ms. McKinley is UTOPIA Fiber's Chief Marketing Officer and joined the company in 2010. In her role as the Marketing Director, she oversees marketing, residential sales, and installation coordination. Before coming to UTOPIA Fiber, she worked in the Hospitality marketing industry on the east coast. Ms. McKinley has a bachelor's Degree in Business Administration from the College of Charleston in Charleston, SC. WE PROVIDE SOLUTIONS#7LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION I: SERIES 2019 BONDS SERIES 2019 BONDS USES Series 2019 Bond proceeds will be used as follows: $34.8M Construction. 31 new fiber footprints (neighborhoods of 800-1,500 homes) Business builds MDU/HOA growth costs ◉ Fill in of existing footprints ■ Expansion outside of network $7.8M Installations (assumes 10,000 residential and 1,000 business connections in new and existing areas over a 1.5-year period). $2.5M for a building purchase – this component is expected to improve access to electronics inventory and better facilitate field services and utility locating (blue stakes). - PAGE 6 WE PROVIDE SOLUTIONS#8LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION II: UTOPIA/UIA OPEN-ACCESS FIBER Industry term that means that the operator of the network and the service provider are separate entities. Sometimes referred to as a "wholesale model” or “infrastructure model”. Unlike closed systems is pro-private sector and pro-competition. Utah code refers to it as "leases, sells capacity in, or grants under similar rights to a private provider". OPEN-ACCESS ROADS Municipalities provide street infrastructure that can be shared by competing private shipping companies. FedEx ups PAGE 7 WE PROVIDE SOLUTIONS#9LYRB OPEN-ACCESS TRANSPORTATION INFRASTRUCTURE UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 PAGE 8 WE PROVIDE SOLUTIONS#10LYRB PAGE 9 ▲ DELTA UNITED FRONTIER AIRLINES SOUTHWEST AIRLINES Municipal Airport UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Alaska AIRLINES jetBlue AA AmericanAirlines allegiant air WE PROVIDE SOLUTIONS#11LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 MUNICIPAL OPEN-ACCESS FIBER Municipalities provide fiber infrastructure that can be shared by competing telecommunications companies. ERACITYTM NETWORKS world class service with a local touch SUMO FIBER INTERNET AND PHONE A 1WIRE COMMUNICATIONS COMPANY InfoWest The Internet People™ PAGE 10 Wire brigham.net XMISSION windstream® W FIRST DIGITAL TELECOM senawave VOONAMI BEEHIVE BROADBAND Open Access Fiber Intellipop Integra Technology you trust. People you kno MEREO OFIBERNET. NETWORKS CentraCom WE PROVIDE SOLUTIONS#12LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 UTOPIA/UIA Although legally separate entities, UTOPIA/UIA functionally operate as one integrated system. UTOPIA is a strong partner to UIA given the 100% sales tax backstop of UTOPIA's debt, the proceeds of which were used on core fiber construction that supports UIA's operations. UIA has two employees that it also shares with UTOPIA (Roger Timmerman and Laurie Harvey) and contracts with UTOPIA for management and operations of the network. The management service fees from UIA to UTOPIA, combined with UTOPIA system revenues, covers all of UTOPIA's operational costs. A broad portion of the State's population can access UTOPIA/UIA services. If they choose to do so, Internet Service Providers can provide their services across UTOPIA/UIA lines. UTOPIA/UIA Fiber's economics for future growth benefits from the following: О New build within the existing UTOPIA/UIA footprint is only incremental with no new major crossings, backbone routes, and major construction obstacles. ○ О О ○ Has the largest established ecosystem of competitive service provider partners in the country. Established economy of scale that is already covering all startup costs. Existing backbone routes, core electronics and core facilities are already capable of supporting additional 100k+ subscribers. Successful track record of building new areas within budget and achieving successful revenue targets. UTOPIA/UIA superior deployment architecture vs. competitors is shown below. OPEN INFRASTRUCTURE Fuels competition among service providers and helps keep costs competitive. Pro private sector. Eleven residential providers. Twenty-five business providers. UTOPIA FIBER CenturyLink™ Google fiber comcast. Xfinity Ethernet Dedicated fiber capacity for every home/business, Easily upgradable to 10x speed GPON Shared capacity, uses timeslots and splitters to connect groups of customers on shared fiber 1 Gbps Down 1 Gbps Up 64 Gbps Down each subscriber 64 Gbps Up Aggregate throughput per 64 customers Switch *assuming 1Gbps drops. 10x better for 10G architecture 2.5 Gbps Down 1.25 Gbps Up Aggregate throughput per 64 customers Switch Splitter Cable More customers sharing. Heavliy based on cable condition. Based on Docsis 3.1 (not widely available yet) 10 Gbps Down 10 Gbps Up Aggregate throughput per 200-800 customers Switch Splitter CCCCCC444 PAGE II WE PROVIDE SOLUTIONS#13LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 GROWTH IN FIBER UNDERSTANDING The benefits of fiber continue to grow in public awareness. As a result, more and more households are making the switch to fiber. Subscriber growth is very strong in all cities. PAGE 12 A 田田 UTOPIA 0000 0000 1010 WE PROVIDE SOLUTIONS#14LYRB SECTION III: UTAH DEMOGRAPHICS AND ECONOMY DEMOGRAPHICS Utah has a young population with a median age of 30.5 which is seven years younger than the median age in the United States (37.8). о 33% of Utah population is under the age of 20. Median Housing value statewide ~ $238,300 compared to $193,500 nationally'. Compared to the nation, Utah has a higher high school graduation rate as well as higher percentage of its population with bachelor's degrees. Median Household income is also higher in Utah at ~$65,325 compared with $57,652 nationally. ECONOMY Utah's stellar economy is largely attributable to affordable taxes, relatively low real estate prices, educated workforce and great quality of life. Job growth in Utah is still strong. Utah has one of the highest job growth rates in the nation. Consumer confidence is running high in Utah. The inflation rate in Utah is approximately 2.4%². UTOPIA/UIA FIBER BACKBONE Shown in the picture to the right is UTOPIA/UIA's fiber backbone which depicts areas that are capable of being served by the network. IU.S. Census Quick Facts. 2 Utah Department of Workforce Services. PAGE 13 NEVADA N NEVADA Boise Elko UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 IDAHO Las Vegas Henderson Idaho Falls Pocatello Twin Falls St George Logan TAH Rock Springs Ogden Salt Lake City Orem Provo UTAH Esri, HERE, Garmin, (c) OpenStreetMap contributors, and the GIS user community WE PROVIDE SOLUTIONS#15LYRB CITIES SERVED BY UTOPIA Provided below is a table of cities, sorted by population with a UTOPIA/UIA presence. Currently, 50 Utah cities have some UTOPIA/UIA presence, representing approximately 21% of cities. Of the cities in Utah that have a population in excess of 10,000 UTOPIA/UIA has fiber in some portion of 59% of those cities. CITIES SERVED BY UTOPIA Salt Lake City Population CITIES SERVED UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Population BY UTOPIA 193,744 American Fork 28,770 West Valley* 136,574 Syracuse 28,407 Ogden Provo 116,868 Saratoga Springs 26,887 West Jordan 113,699 South Salt Lake 24,630 Orem* 97,499 Farmington 23,140 Sandy 95,836 North Salt Lake 20,301 Ogden 86,701 Payson 19,810 St. George 82,318 Brigham City* 18,975 Layton* 75,655 Centerville* 17,286 South Jordan 69,034 Heber 14,969 Lehi 61,130 Bluffdale 11,809 Salt Lake City West Valley Taylorsville 60,436 Lindon* 10,939 City Millcreek 59,737 West Point 10,548 West Jorda Logan 50,676 Pleasant View 9,716 Tooele Murray* 49,230 Tremonton 8,426 Draper Bountiful 47,328 Park City 8,299 44,078 Farr West 6,755 Spanish Fork 38,861 Fruit Heights 6,161 Pleasant Grove 38,756 Perry 4,846 Herriman 35,385 Morgan 4,154 Cottonwood Height 34,285 Vineyard 3,953 Springville 33,044 Garland 2,492 Midvale* 33,035 Woodland Hills 1,527 Kaysville 31,243 Mendon 1,386 Clearfield 30,855 Milford 1,357 UTAH Orem Provo Evanston Represents cities where fiber to the home is being built. *Original UIA pledging members. UTOPIA/UIA fiber has a broad reach beyond the boundaries of the member cities. UIA has a contract in place with Idaho Falls to build and manage its FTTH network. Earl, HERE, Garmin, (c) OpenStreetMap contributors, and the GIS user community PAGE 14 WE PROVIDE SOLUTIONS#16LYRB Shown in the table to the right is a map of the State of Utah showing the many cities served by UTOPIA/UIA. Green dots represent UTOPIA/UIA cities and red dots represent cities with a UTOPIA presence. Additionally, shown are networks Idaho Falls and Las Vegas which UIA manages. 196 Howell Promontory 83 Great Salt Lake Dugway Maps PAGE 15 (30 North Logan Locan 16 Tremonton Providence Randolph Honeyville Hyrum 101 38 15- Antelope Island Brig City Perry 89 134 Og en Layo Henefer 15 Bou⚫tiful 65 215 80 Salt Lake City 80 138 Grantsville Erda Valley Cit (85) 154) West Cordan Sa dy Tooele Stockton Echo Coalville Woodruff (16) , Bear River Almy Evanstor Wahsatch 190 Parl City (248) Kamas Twin Peaks 32 150 Heb City (189) Timber Lakes Mt Timpanogos Flat Top Mountain (73) Terra Cedar Fort Orem 36 Fairfield Provo 68 Spriroville Vernon Span Fork Payson 89 Santaquin Eureka 6 West Portal 6 IDAHO Jerome Twin Falls Burley 84 Jackpot 86 UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Idaho Falls Dubois Jackson ° 15 Blackfoot Pocatello Logan WIND RESER Rock Spring 80 Oden Evanston 80 80 West Wendover Salt Lake City 80 80 Vegas Cedar City 70 te OF VO Price 15 UTAH Richfield Vernal UINTAH AND OURAY RESERVATION Moab 70 Bluff UTE! St. George Springdale Oljato Monument RESE Valley Kanab Mesquite Kayenta NAVAJO NA WE PROVIDE SOLUTIONS#17LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION IV: UIA INFRASTRUCTURE CONSTRUCTION INFRASTRUCTURE BUILD The entire UTOPIA/UIA network consists of 167 planned "footprints" of various sizes. Approximately 120 of those footprints have been completed (72% completion) and each footprint has approximately 800-1,500 passable addresses. UIA's goal is to build out the remaining 47 footprints within the next three years. There are approximately 162,500 addresses within the II pledging UTOPIA cities; however, about 12,500 of those addresses are in areas where access is restricted (HOAs or MDUs, for example). Upon completion of the Layton and Payson projects (separately funded) by summer of 2020, UTOPIA/UIA will have passed 115,000 of 150,000 accessible addresses, 77% of UIA's goal. Proceeds of the Series 2019 Bonds will be used to pass approximately 20,000 addresses, resulting in 90% completion. UIA intends to issue additional bonds in 2021 to complete the remaining 10% of the network. LOCATIONS DEPLOYED (ROUNDED TO NEAREST 100) TOTAL ADDRESSES CITY (INCLUDING INACCESSIBLE) ADDRESSES PASSED PROGRESS COMPLETED PLEDGING CITIES Brigham City Centerville Layton 6,600 6,500 5,600 5,500 Complete Complete 25,900 22,600 87%' Lindon Midvale Murray Orem Payson 5,000 4,900 Complete 14,700 9,000 61% 22,400 16,200 72% 29,800 17,400 58% 6,100 3,300 54% Perry Tremonton 1,800 1,800 Complete 3,300 3,000 Complete West Valley City 41,300 18,700 45% Total Pledging Cities 162,500 108,900 67% NON-PLEDGING CITIES Woodland Hills 500 500 Complete Morgan² 1,400 West Point² 3,500 Total Non-Pledging Cities 5,400 Total Pledging & Non-Pledging 167,900 500 109,400 9% 65% 1. Projected to be complete by end of CY 2019. PAGE 16 2. Completed bond transactions in 2019. Buildout is ongoing. Planned completion by end of 2020. WE PROVIDE SOLUTIONS#18LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION V: TAKE RATE STATISTICS RESIDENTIAL TAKE RATES Provided below is a table view of residential take rates in completed footprints throughout the UTOPIA/UIA Network. RESIDENCES RESIDENCES "TAKE CITY PASSED SUBSCRIBED RATE" Brigham City 5,100 2,100 41% Centerville 4,500 1,800 40% Layton 18,100 4,400 24% Lindon 2,700 1,500 56% Midvale 3,500 700 20% Murray 7,700 2,400 31% Orem 11,800 3,300 28% Payson 2,700 900 33% Perry 1,700 600 35% CV003 Tremonton 2,600 800 31% West Valley City 14,100 2,200 16% Woodland Hills 500 200 41% Total 75,000 20,900 28% *Note: Not all areas have been available for subscription for the 36- month maturation period. PAGE 17 W WPages Ln Rosedale CV002. G004**** Valencia evobo Tuis now Pa WE PROVIDE SOLUTIONS#19LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Provided below is a graph view of residential take rates in completed footprints throughout the UTOPIA/UIA Network, exclusive of 3.4% churn rate. UTOPIA/UIA churn rate is below the industry standard. о PAGE 18 0.31 0.3 0.29 0.28 27.23% 26.90% 0.27 0.26 0.25 Residential Take Rate 28.19% 27.79% 27.45% 27.31% 2017-QI 2017-Q2 2017-Q3 2017-Q4 28.81% 28.56% 30.04% 29.92% 29.34% 29.40% 2018-QI Take Rate 2018-Q2 2018-Q3 Average for 3 Years 2018-Q4 2019-QI 2019-Q2 2019-Q3 2019-Q4 Trendline WE PROVIDE SOLUTIONS#20LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 As shown below, cities are seeing growth in residential connections, even cities whose infrastructure has been built out for many years. UTOPIA/UIA expects to see this trend continue. 50.00% 45.00% 40.00% 35.00% 30.00% 25.00% 20.00% 15.00% 10.00% 5.00% Take Rate Growth (Maturity toward 30%) 0.00% LA001 LA006 LAOII LA013 LA020 LA021 LA022 LA026 OR033 OR038 PEOOI WV001 WV002 WV007 WV015 WV034 WV042 2016 2017 2018 2019 Year I Take Growth Year 2 Take Growth Year 3 Take Growth Year 4 Take Growth Key drivers for continued take rate increases include growing need for bandwidth to support home automation, schoolwork, work-from- home, and supporting multiple devices within the home. Additionally, dissatisfaction with current incumbent providers adds to the demand for UTOPIA/UIA open access services. UIA's excellent reputation and that fact that it is a local, reliable fiber provider also contribute to the growing subscriber base. PAGE 19 WE PROVIDE SOLUTIONS#21LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 It takes approximately 36 months for a neighborhood to mature (30% take rate). As shown in the table to the right, take rates continue to increase well beyond the 36-month mark. YEARS SPENT AS SERVICEABLE AVERAGE TAKE RATE 19% 2 28% 3 33% 4 38% 5 42% 6 46% 7 46% 8 51% 9 51% 10 51% PAGE 20 WE PROVIDE SOLUTIONS#22PAGE 21 LYRB 2,000,000 1,800,000 UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 STRONG DEMAND STRONG ONGOING SUCCESS Monthly comparisons, year over year, show consistent growth as seen in the graph shown below. Residential connections are up about 29% from this time last year. Both the UTOPIA and UIA Boards are supportive of continued expansion to maintain cost synergies and capture positive momentum. Recurring Revenue Combined (UTOPIA and UIA) 1,600,000 1,400,000 UTOPIA UIA Total 1,200,000 1,000,000 800,000 600,000 400,000 200,000 Jul-12 Sep-12 Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 Nov-13 *]-ue[ Mar-14 May-14 Jul-14 Sep-14 Nov-14 Jan-15 Mar-15 May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16 May-16 Jul-16 Sep-16 Nov-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 WE PROVIDE SOLUTIONS#23PAGE 22 LYRB 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Nov-14 Sl-ue[ UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 As shown in the following two graphs, cities are seeing connection growth, even cities whose infrastructure has been built out for many years. UTOPIA/UIA expects to see this trend continue. Shown below are graphs of city subscribers from November 2014 through August 2019. Total subscribers have increased from approximately 11,800 to 25,000, a 108% increase, in this time period. Total Subscribers by City Mar-15 May-15 Jul-15 Sep-15 Brigham City Payson Nov-15 Jan-16 Mar-16 May-16 Jul-16 Nov-16 Sep-16 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 81-ue[ Mar-18 May-18 Jul-18 Sep-18 Nov-18 Centerville Layton Lindon Midvale Perry Tremonton West Valley City Woodland Hills Murray Other 61-ue[ Mar-19 May-19 Jul-19 Orem WE PROVIDE SOLUTIONS#24LYRB 30,000 25,000 20,000 15,000 10,000 5,000 Total Subscribers 91-ue[ 91-ΛΟΝ * * * * * * * * * * * * * * * O ΦΙΛΟΝ PAGE 23 May-17 Jul-17 UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 WE PROVIDE SOLUTIONS#25LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 NON-RESIDENTIAL TAKE RATES Non-residential data is best viewed by showing the increase in business revenues, as revenue per business subscriber has wider variability than does residential revenue. Growth trends are strong in the non-residential sector as well as in residential. UTOPIA/UIA has over 4,000 non-residential customers. Business customers pay service fees. The cost of service for the smallest business is below $100. By contrast, Utah Education Network (UEN), our largest customer, pays $7,500 per month for 100 gbs service in one location, and $3,200 for 10 gbs service in another. The graph below includes the diverse non-residential revenues including wireless, 5G backhaul, fixed wireless ISP, governmental, business, and education. Jul-19 UIA Monthly Revenue by Source Apr-19 Jan-19 Oct-18 Jul-18 Apr-18 Jan-18 Oct-17 Jul-17 Apr-17 Jan-17 Oct-16 Jul-16 Apr-16 Jan-16 Oct-15 Jul-15 Apr-15 Jan-15 Oct-14 Jul-14 $- $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000 $1,400,000 $1,600,000 ■Business ■Residential (Service Provider) Residential (Connection) ■ Other PAGE 24 WE PROVIDE SOLUTIONS#26PAGE 25 Jun-11 $200,000 Dec-11 $400,000 Jun-12 Dec-12 $1,000,000 $1,200,000 $1,400,000 LYRB The graph below is another illustration of the growth in revenues and compares that to existing and planned 2019 Bond debt service. Current revenues are sufficient to pay Series 2019 Bonds without any new connections/revenues. UIA Revenue v. Bond Obligation (Monthly Recurring Gross Revenue) $800,000 Revenue Prior Bond Issues 2019 Bonds $600,000 The revenues in the chart above exclude revenues pledged toward separate, city-backed debt. Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 WE PROVIDE SOLUTIONS Dec-18 Jun-19 Dec-19 UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019#27LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION VI: RECENT CONSTRUCTION AND COST INFORMATION INFRASTRUCTURE BUILT Many of the completed projects are underground infrastructure. Some of the completed projects include overhead construction. LOCATIONS DEPLOYED Listed below are recently completed projects: FOOTPRINTS BUILT ADDRESSES CONSTRUCTION OPENED PASSED COST Midvale 13 Layton 6 570 $ 510,400 Aug-18 1,045 1,700,000 Aug-18 Orem 38 868 1,404,100 Aug-18 Layton 24 273 356,800 Oct-18 Layton 22 962 1,180,800 Nov-18 Layton 3 696 759,300 Nov-18 W. Valley 34 794 1,365,200 Dec-18 Woodland Hills 511 1,955,600 Mar-19 W. Valley 33 793 683,600 Apr-19 Layton I 1,742 2,238,100 May-19 Layton 14 517 642,918 May-19 Layton 7 702 991,623 Aug-19 Orem 3 405 94,267 Aug-19 Orem 7 300 349,682 Aug-19 Orem 18 Total 486 666,500 Sep-19 10,664 $ 14,898,890 The construction costs noted above are for the mainline construction cost only. GROWTH FROM CONTINUED DEPLOYMENT UTOPIA/UIA has kept, or exceeded, its estimates for new customers. After a neighborhood is able to receive services, new customers start to come online within about 10 days. PAGE 26 WE PROVIDE SOLUTIONS#28LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 COST CONTAINMENT UTOPIA/UIA has not seen any significant increases in its construction cost as its most recent deployments have moved forward. Following an RFP process, UTOPIA/UIA entered into a two-year fixed price contract in December 2017 for main line construction and installation components of its network with minimal cost increases. ○ 00 UTOPIA/UIA has the option to renew its contract after the initial two-year contract yearly for up to five years with renegotiated costs. UIA has an excellent relationship with its main contractor, B. Jackson Construction and is currently reviewing their proposed increases. UTOPIA/UIA expects to successfully renegotiate the contract with cost increases of less than 10%, which is within the anticipated range of UTOPIA/UIA management. Electronics costs for fiber-to-the-home are becoming increasingly commoditized, especially for Ethernet-based deployments like UTOPIA/UIA Fiber. Transceiver Cost Example - used in every UTOPIA/UIA Fiber installation • 100 Mbps transceiver in 2004 - ~$145 | Gbps transceiver in 2019 - $12 10 Gbps transceiver in 2019 - $36 Core-alignment fusion splicer example – tool used by installation and maintenance technician • • 2004 $50,000 2018-$1,500 2019 - $1,000 Improvements in materials such as micro-cables and micro-ducts not previously available allow for lower cost of deployment. Technology is rapidly improving in electronics. Costs have decreased and efficiency and power has improved. Construction providers include B. Jackson Construction (main line) and TCB (Installation). Core materials providers include Corning and Nokia. Huawei is the preferred provider for aggregation switches, but suitable alternatives are available if needed. PLANNED MAINTENANCE SCHEDULE UTOPIA budgets $500,000 - $600,000 annually for replacement and upgrades to core electronics. Expected life cycle of core electronics is 5-10 years. Replacing equipment is less expensive than upgrading current equipment. Equipment that supported 200 gig ports 5-7 years ago now supports 600 gig ports. UTOPIA is currently expanding capacity on the central ring from 100 gig to 400 gig. Customer premises equipment (CPE) is replaced with service upgrades or when necessary. Average cost of CPE is about $110 per location. PAGE 27 WE PROVIDE SOLUTIONS#29LYRB SECTION VII: DATA USAGE STATISTICS CONTINUED EXPANSION IN DATA USE 89% of Americans use the internet daily. The table below shows Utah's population classifications and the percentage in those classes that have residential internet nationally. AGE RANGE STATE POPULATION HAVE RESIDENTIAL IN AGE RANGE INTERNET 18-29 23.40% 98.00% 30-49 25.90% 97.00% 50-64 14.60% 87.00% 65+ 10.00% 66.00% UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 % of U.S. adults who use the internet, by income 100 75 50 25 As shown in the graph to the right, internet usage is also increasing among lower income brackets. 0 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 -Less than $30,000 $30,000-$49,999 $50,000-$74,999 $75,000+ Source: Surveys conducted 2000-2018 Data for each year based on a pooled analysis of all surveys conducted du- ring that year. PEW RESEARCH CENTER "As smartphones and other mobile devices have become more widespread, 26% of American adults now report that they go online "almost constantly," up from 21% in 2015, according to a Pew Research Center survey conducted in January 2018³. Customers are increasingly opting for | Gig connections. Approximately 4,700 residential and business customers (19%) have subscribed for I Gig or higher speeds. This represents a 231% increase from 2015. The graph below shows the increase in | Gig + connections since 2015. BARRIERS TO ENTRY REMAIN HIGH FOR OTHER FTTH ENTITIES Growth in I Gb+ Services (Business and Residential) 2,500 Startup of FTTH is very expensive and fraught with third-party caused delays including the following: 2,000 О O O O O O O Permitting for major crossings (l.e. railroads, canals, freeways). Fiber backbone construction is expensive and slow to deploy. Core electronics procurement, configuration, and testing. Core facilities procurement and construction. 1,500 1,000 Network Operations Center setup, training, staffing. 500 IT Systems and billing procurement, configuration. 0 Internet service startup costs (IP Address acquisition, data center co-location, upstream Internet transit). 2015 2016 2017 2018 2019 3 (Source: Morningstar Stock Analyst Notes 1-24-2018) "Comcast posted its third straight quarterly decline in television customers, losing 38,000 residential video subscribers in the fourth quarter of 2017" and "The traditional pay-TV ecosystem is at risk as viewership shifts from linear to digital." PAGE 28 WE PROVIDE SOLUTIONS#30LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION VIII: RESIDENTIAL AND COMMERCIAL COMPETITIVE LANDSCAPE COMPETITION MAIN COMPETITORS Century Link (direct competitor in UTOPIA/UIA markets). Comcast (direct competitor in UTOPIA/UIA markets). Google Fiber (currently in two markets in Utah, Salt Lake City and Provo, but are not located in UTOPIA/UIA cities). COMPETITORS' SERVICES Below is a sample table of providers' services and rates. All speed offerings are not directly comparable since UTOPIA/UIA fiber is direct to the household and others are not. COMCAST UTOPIA/UIA FIBER 15 Mbps - $29.99 60 Mbps - $39.99 150 Mbps - $54.99 250 Mbps $69.99 400 Mbps $84.99 I Gbps for $89.99 (min. 2-year requirement plus mandatory equipment rental *All prices are introductory and increase by $30 after the first year of service CENTURY LINK 20 Mbps - $45.00 40 Mbps $55.00 250 Mbps for $65.00 I Gbps for $78.00 10 Gbps for $229.00 GOOGLE FIBER 100 Mbps for $50 I Gbps for $70 The repeal of net neutrality was effective in June 2019 and created an even better story for UTOPIA/UIA as it remains a net neutral provider unlike its competition. THE "GOOGLE FACTOR" Google's foray into the Utah market has helped UTOPIA/UIA as it greatly increased fiber awareness. Google has drastically slowed its fiber deployment in the State. Generally, Google's service areas do not overlap with UTOPIA/UIA. Where some overlap exists UTOPIA/UIA and Google market to different segments (business v residential). Google only does 'fiber to the door' making UTOPIA/UIA more competitive for multifamily projects. PAGE 29 WE PROVIDE SOLUTIONS#31LYRB UTOPIA/UIA SUSTAINABLE COMPETITIVE ADVANTAGES Bi-directional speed offering Price competitiveness Multiple consumer service provider choices Strongest Net Promoter Score among its competitors Gains made in awareness and acceptance of service Net Neutrality which is supported by the FCC - COMPETITIVE RISKS WHAT THEY ARE AND HOW THEY ARE MITIGATED TV offerings by Comcast because they own content and their interface is intuitive and user friendly. о Mitigated by the OTT offerings that are currently on the market and our ability to market these to our customers. Most TV content consolidation has already occurred leaving the big three. AT&T/ Direct TV ◉ Disney ◉ Comcast (Regional Sports Networks) UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 О О Any further mergers would likely violate antitrust regulations. With the loss of net neutrality ‘bad players' will likely face anti-trust suits brought by other big providers in the OTT platform. Trend has been away from single sourcing content. Perceived risk - 5G wireless. While this is a perceived risk to UTOPIA/UIA services, the following statements provide reason why it is not an actual risk to UTOPIA/UIA. О О 5G deployments are heavily dependent on fiber. Many of the wireless providers in Utah utilize UTOPIA/UIA Fiber infrastructure and are a source of revenue. Increased use of wireless increases demand for fiber and increased revenue for UTOPIA/UIA Fiber without taking from primary line service for homes and businesses. 5G is not a replacement for primary service at homes. According to a leading 5G equipment vendor, 5G is only incrementally better than 4G and is expected to have minimal change on the market. Perceived risk - Satellite Broadband (Next-Gen) о Good for cruise ships, military, extremely rural areas. О Much higher latency than fiber. One desk-sized satellite covers 92,200 square miles. Utah alone covers 84,900 square miles. The incumbent telecoms outspend UTO PIA/UIA on marketing and public relations efforts. Mitigated by the fact that their offerings are not as good as UTOPIA/UIA and they have negative market perception. PAGE 30 WE PROVIDE SOLUTIONS#32LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION IX: RESIDENTIAL AND COMMERCIAL MARKETING PLANS BUDGET $925k for 2020 fiscal year (UTOPIA/UIA combined). The pie chart below illustrates monthly marketing budget allocations. Spending marketing dollars efficiently to acquire new customers at a low customer acquisition cost. STAFFING UTOPIA Fiber Marketing Monthly Spend Welcome Packets 4% Quarterly Mailers 24% Other 4% Facebook 11% Pandora 12% Search 5% New Area Mailers 16% Retargeting 5% Display 6% Reputation Management 3% Truview 10% UTOPIA/UIA has two full-time marketing coordinators and utilizes a full-service ad agency to help with marketing needs. PAGE 31 WE PROVIDE SOLUTIONS#33LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 APPROACH Targeted marketing vs. Mass Marketing. Market to make sure customers know of Open Access UTOPIA/UIA Fiber takes many approaches towards the Digital ads Social media easy to switch. marketing challenges of a municipal network in Il cities, including: MARKETING STRATEGIES Pandora/TruView (YouTube products) Mass marketing - select markets SEO/SEM UTOPIA has a Google rating of 4.5. NET PROMOTER SCORE Referral campaigns Reputation management Grass roots marketing City specific marketing - select markets PR campaigns Highest customer satisfaction in Utah. How likely are you to recommend UTOPIA to a friend or colleague? PAGE 32 Net Promoter Score = 64 1696 1396 696 57% 496 196 960 0% 960 096 Not at all likely 2 2 3 4 Neutral 6 7 8 9 Extremely Likely UTOPIA PINER Third-party survey conducted August 2018 by Boncom 801413800 4800 Mary, UT 8411 UTOPIAFiber.com WE PROVIDE SOLUTIONS#34LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SUCCESS MEASURES As shown in the table below, UIA residential and business connections increased from 40.6% from 11,005 in August 2018 to 15,470 in August 2019. AUGUST 2018 AUGUST 2019 PERCENT CITY RESIDENTIAL BUSINESS TOTAL CITY RESIDENTIAL BUSINESS TOTAL CHANGE GROWTH Brigham City Centerville 608 81 689 Brigham City 789 96 885 196 28.4% 1,665 ||| 1,776 Centerville 1,790 120 1,910 134 7.5% Layton 1,301 189 1,490 Layton 3,094 259 3,353 1,863 125.0% Lindon 850 132 982 Lindon 976 149 1,125 143 14.6% Midvale 363 150 513 Midvale 501 157 658 145 28.3% Murray 1,152 366 1,518 Murray 1,356 397 1,753 235 20.4% Orem 1,704 375 2,079 Orem 2,194 422 2,616 537 25.8% Payson 10 10 Payson 9 9 -| -10.0% Perry 3 3 Perry I I -2 -66.7% Salt Lake 126 126 Salt Lake 159 159 33 26.2% Tremonton 7 7 Tremonton 6 6 -| -50.0% West Valley Misc. 1,305 351 1,656 West Valley 1,988 407 2,395 739 44.6% Total 8,948 156 2,057 156 11,005 Misc. Total 349 251 600 444 284.6% 13,037 2,433 15,470 4,465 40.6% Other notable data center type customers include: Data Bank, Level 3, Viawest, Ace Data Centers, Voonami, Tonaquint, and the University of Utah. SERVICE PROVIDERS The following table shows the five largest service providers (based on revenue) on the UIA/UTOPIA Network for the past four fiscal SERVICE PROVIDER Xmission Veracity FISCAL YEAR 2019 29.8% 20.6% FISCAL FISCAL YEAR 2018 YEAR 2017 26.2% 20.1% 22.7% 18.9% FISCAL YEAR 2016 20.7% 18.4% 13.1% 8.6% 7.1% 67.9% F1111 Windstream Sumo First Digital Total 5.3% 8.1% 4.9% 68.7% 8.8% 7.6% 6.7% 69.4% 11.4% 7.8% 7.4% 68.1% years. PAGE 33 WE PROVIDE SOLUTIONS#35LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 YEAR FISCAL BEGINNING YEAR NEW USERS ADDED CANCELLED ACTIVE USERS ACTIVE USERS LOW CHURN The typical churn rate for most residential telecom providers is 10%. UTOPIA/UIA's residential churn rate is well below this average at 3.5%. For non-residential customers, UTOPIA/UIA's churn rate is similar to industry standards. Provided below is a 15-year churn rate history. YEAR ENDING ANNUAL CHURN RATE 6.0% 2005 346 346 0.0% 2006 346 4,382 96 4,632 2.0% 5.0% 2007 4,632 2,153 378 6,407 5.6% 2008 6,407 1,992 388 8,011 4.6% 4.0% 2009 8,011 1,635 433 9,213 4.5% 2010 9,213 1,684 475 10,422 4.4% 3.0% 2011 10,422 489 401 10,510 3.7% 2012 10,510 1,582 341 11,751 2.8% 2.0% 2013 11,751 1,362 385 12,728 2.9% 2014 12,728 1,142 613 13,257 4.4% 1.0% 2015 13,257 \,||| 484 13,884 3.4% 2016 13,884 1,971 578 15,277 3.6% 0.0% 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2017 15,277 2,616 584 17,309 3.3% -Annual Address Churn Rate 2018 17,309 3,497 632 20,174 3.0% 2019 20,174 5,186 867 24,493 3.4% 2020 24,493 1,284 347 25,430 1.3% PAGE 34 WE PROVIDE SOLUTIONS#36LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION X: FINANCIAL MATTERS UIA FINANCIAL INFORMATION FINANCIAL UPDATE Shown below are preliminary cash basis revenues and expenses as compared to the Amended FY 2019 Budget. Also included is the FY 2020 Budget. Operating Revenues FY 2019 BUDGET FY 2019 ACTUALS (PRELIMINARY) PROJECTED % OF BUDGET FY 2020 BUDGET 12,920,600 $13,907,000 107.6% $ 16,806,600 Operating Expenses Marketing and other services 843,800 634,700 75.2 850,200 Network management 3,322,200 2,307,600 69.5 4,480,000 Total Operating Expenses 4,166,000 2,942,300 70.6 5,330,200 Operating profit 8,754,600 10,964,700 125.2 11,476,400 Other revenues/expenses Interest revenue 1,037,500 1,186,500 114.4 1,100,000 Contribution from cities 1,709,500 1,709,500 100.0 Bond proceeds 54,596,500 54,596,500 100.0 Contribution from restricted funds 14,300,000 Transfer to Capl/DSR (4,077,300) (4,077,300) 100.0 Bond issuance costs (1,122,500) (1,161,000) 103.4 Debt service (P&I) (8,353,100) (8,353,100) 100.0 (7,476,500) Repayment of Op/Ex (610,400) (505,600) 82.8 (830,000) Network expansion/capital (50,061,000) (31,162,800) 62.2 (15,200,000) Transfer to Construction Fund (18,300,000) Total other rev/exp (6,880,800) (6,067,300) 88.2 (8,106,500) Net Revenue (Expenses) $ 1,873,800 $4,897,400 261.4% $ 3,369,900 UIA has $6M in reserves and estimates $5.3M in operational expenses in FY 2020. UIA has one full year of operating expenses in cash reserves. We note that the expected increase in FY 2020 operating expenses is due to the following: О Re-evaluation and reimbursement to UTOPIA of executive staff time spent on UIA matters. An increase in contracted service costs payable to UTOPIA based on network addresses passed and number of subscribers. PAGE 35 WE PROVIDE SOLUTIONS#37LYRB SUMMARY FINANCIAL DATA UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 Below are two summary tables, including and excluding depreciation, of net operating revenues, operating income as a percentage of operating revenue, unrestricted cash balances, and unrestricted cash balances as a percentage of operating revenue. INCLUDING DEPRECIATION PAGE 36 Operating Revenue Operating Expense (1) Operating Income Operating Income (%) Net Income Net Income (%) Unrestricted Cash 3,146,791 Unrestricted Cash (%) 41.0% ACTUAL FY 16 FY17 FY18 7,689,314 9,055,560 10,641,815 3,751,076 4,716,168 7,100,740 3,938,238 4,339,392 3,541,075 51.3% 48.0% 33.3% 1,579,484 2,433,466 172,596 20.6% 26.9% 1.7% 6,185,494 5,447,838 68.3% 51.2% PRELIMINARY FY19 13,907,000 16,806,600 6,971,500 10,330,200(2) BUDGETED FY 2020 6,935,500 6,476,400 49.9% 1,447,100 38.5% 189,900 10.4% 8,777,600 63.1% 1.1% 10,000,000 59.5% (1) Includes Depreciation (2) Depreciation is estimated at $5 million for FY 2020. UIA no longer formally budgets for depreciation. EXCLUDING DEPRECIATION Operating Revenue Operating Expense (1) FY 16 7,689,314 749,021 Operating Income 6,940,293 Operating Income (%) 90.3% Net Income 4,581,539 Net Income (%) 59.6% Unrestricted Cash 3,146,791 Unrestricted Cash (%) (1) Excludes Depreciation 41.0% ACTUAL FY17 9,055,560 1,166,283 7,889,277 87.2% 5,983,351 66.1% 6,185,494 68.3% PRELIMINARY FY18 10,641,815 2,631,424 FY19 13,907,000 2,942,300 BUDGETED FY 20 16,806,600 5,330,200 8,010,391 10,964,700 11,476,400 75.3% 4,641,912 43.6% 5,447,838 78.9% 5,476,300 68.3% 5,189,900 39.3% 8,777,600 51.2% 63.1% 30.9% 10,000,000 59.5% WE PROVIDE SOLUTIONS#38LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 HISTORICAL FINANCIAL FORECAST AND ESTIMATED DEBT SERVICE COVERAGE ASSUMING NO GROWTH IN REVENUES FROM NEW AREAS TO BE BUILT FISCAL YEAR 2015 2016 2018 HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE 2017 2019 2020 2021 2022 2023 2024 2025 UIA Network Revenues(1) Service Contract (Lease Agreements) 702,769 Service Contract (CUE Agreements) 418,315 940,608 519,787 Service Provider Agreements 4,329,738 5,450,373 1,312,274 563,978 6,382,197 1,705,427 693,302 7,706,863 Installation 410,402 176,741 167,615 Miscellaneous 466,116 601,806 Total UIA Network Revenues: (1) 6,327,340 7,689,315 Plus: Franchise Tax Revenues(2) 5,151,152 5,151,152 Total Available Revenues Less: O&M Expenses (1)(3) Less: IRU Annual Payment(4) 11,478,492 528,463 655,000 12,840,467 Net Revenues 10,295,029 749,021 655,000 11,436,446 110,353 629,496 425,869 9,055,560 10,641,814 13,907,000 5,151,152 5,151,152 5,151,152 14,206,712 15,792,966 1,166,283 2,539,356 710,944 9,729,606 99,100 827,994 2,844,079 746,491 10,751,215 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 3,185,368 783,816 3,185,368 783,816 11,880,092 11,880,092 104,055 867,650 15,313,489 109,258 904,379 16,862,913 109,258 904,379 16,862,913 109,258 904,379 109,258 109,258 904,379 904,379 16,862,913 16,862,913 16,862,913 5,151,152 5,151,152 19,058,152 20,464,641 22,014,065 5,151,152 5,151,152 5,151,152 5,151,152 22,014,065 22,014,065 22,014,065 22,014,065 655,000 12,385,429 2,631,424 655,000 12,506,542 3,489,200 982,500 14,586,452 5,330,200 5,383,500 5,437,300 5,491,700 5,546,600 5,602,100 15,134,441 16,630,565 16,576,765 16,522,365 16,467,465 16,411,965 Debt Service Series 2011A Bonds 1,117,680 1,117,680 1,117,680 1,1 17,680 Series 2011B Bonds 1,007,923 1,004,883 1,006, 123 Series 2013 Bonds 782,100 780,275 781,875 Series 2015 Bonds 1,597,098 Series 2017 Bonds 897,521 541,300 1,1 13,024 1,172,824 Series 2018 Bonds 6,237,125 867,543 5,781,575 1,676,088 Series 2019 Bonds(5) Total Debt Service 2,907,703 2,902,838 4,502,775 4,842,349 7,104,668 7,457,663 5,775,125 1,677,838 978,225 8,431,188 5,751,600 1,678,088 3,228,825 10,658,513 5,752,400 5,743,125 5,533,750 1,676,838 1,674,088 1,674,713 3,226,950 3,231,575 3,227,575 10,656,188 10,648,788 10,436,038 Debt Service Coverage(5) (6) 3.54 3.94 2.75 2.58 2.05 2.03 1.97 1.56 1.55 1.55 1.57 Source: The Agency and the Municipal Advisor, based on the Agency's audited financial statement for the fiscal year ended June 30, 2018. (I) Projected based on the Agency's preliminary financial statements for the fiscal year ended June 30, 2019. Does not include Available Franchise Tax Revenues. (2) Pledged by the Contracting Members pursuant to the Service Contract. (3) Excludes depreciation. The Agency's Operation and Maintenance Expenses primarily consist of the monthly fees it pays to UTOPIA pursuant to the UTOPIA Service Agreement. (4) Pursuant to the IRU Agreement, which provides long-term rights to the Agency to connect the UIA Network to the UTOPIA Network. The IRU payments to UTOPIA were accelerated, and were paid in full in FY 2019. (5) Preliminary, subject to change. (6) Net Revenues divided by Debt Service on the Series 2017, 2018, and 2019 Bonds. Additional bonds test is 1.50X comparing the last historical audit figures to debt including the new debt payment. This table shows the inclusion of the Series 2019 Bonds without the resulting revenues/expenses. UIA has paid its bond payments to the Trustee 6 months in advance. This is a result of better than expected revenues. PAGE 37 WE PROVIDE SOLUTIONS#39LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 HISTORICAL FINANCIAL FORECAST AND ESTIMATED DEBT SERVICE COVERAGE WITHOUT FRANCHISE TAX REVENUES - ASSUMING NO GROWTH IN REVENUES FROM NEW AREAS TO BE BUILT FISCAL YEAR 2015 2016 HISTORICAL AND PROJECTED DEBT SERVICE COVERAGE 2017 2018 2019 2020 2021 2022 2023 2024 2025 UIA Network Revenues(1) Service Contract (Lease Agreements) 702,769 Service Contract (CUE Agreements) 418,315 Service Provider Agreements 4,329,738 940,608 519,787 5,450,373 1,312,274 563,978 6,382,197 1,705,427 693,302 7,706,863 Installation 410,402 176,741 Miscellaneous 466,116 Total UIA Network Revenues: (1) 6,327,340 601,806 7,689,315 167,615 629,496 Total Available Revenues 6,327,340 7,689,315 Less: O&M Expenses (1)(2) 528,463 Less: IRU Annual Payment(3) 655,000 Net Revenues 5,143,877 749,021 655,000 6,285,294 655,000 7,234,277 655,000 7,355,390 110,353 425,869 9,055,560 10,641,814 13,907,000 9,055,560 10,641,814 13,907,000 1,166,283 2,631,424 3,489,200 982,500 9,435,300 2,539,356 710,944 9,729,606 99,100 827,994 2,844,079 746,491 10,751,215 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 3,185,368 783,816 11,880,092 104,055 109,258 867,650 904,379 15,313,489 16,862,913 15,313,489 16,862,913 5,330,200 5,383,500 109,258 904,379 109,258 904,379 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 16,862,913 5,437,300 5,491,700 5,546,600 5,602,100 109,258 109,258 904,379 904,379 9,983,289 11,79,413 11,425,613 11,371,213 11,316,313 11,260,813 Debt Service Series 2011A Bonds 1,117,680 1,117,680 1,117,680 1,117,680 Series 2011B Bonds 1,007,923 1,004,883 1,006, 123 897,521 Series 2013 Bonds 782,100 780,275 Series 2015 Bonds 781,875 1,597,098 541,300 Series 2017 Bonds 1,113,024 1,172,824 Series 2018 Bonds 6,237,125 867,543 5,781,575 1,676,088 Series 2019 Bonds(4) 5,775,125 1,677,838 978,225 Total Debt Service 2,907,703 2,902,838 4,502,775 4,842,349 7,104,668 7,457,663 8,431,188 5,751,600 1,678,088 1,676,838 1,674,088 1,674,713 3,228,825 3,226,950 3,231,575 3,227,575 10,658,513 10,656,188 10,648,788 10,436,038 5,752,400 5,743,125 5,533,750 Debt Service Coverage (4) (5) 1.77 2.17 1.61 1.52 1.33 1.34 1.36 1.07 1.07 1.06 1.08 Source: The Agency and the Municipal Advisor, based on the Agency's audited financial statement for the fiscal year ended June 30, 2018. (1) Projected based on the Agency's preliminary financial statements for the fiscal year ended June 30, 2019. Does not include Available Franchise Tax Revenues. (2) Excludes depreciation. The Agency's Operation and Maintenance Expenses primarily consist of the monthly fees it pays to UTOPIA pursuant to the UTOPIA Service Agreement. (3) Pursuant to the IRU Agreement, which provides long-term rights to the Agency to connect the UIA Network to the UTOPIA Network, the Agency makes an annual lease payment to UTOPIA. IRU payments were accelerated and paid in full in FY 2019. (4) Preliminary, subject to change. (5) Net Revenues divided by Debt Service on the Series 2017, 2018, and 2019 Bonds. Estimated debt service coverage without franchise tax revenues is approximately 1.07x. PAGE 38 WE PROVIDE SOLUTIONS#40LYRB MEMBER CITY FRANCHISE FEE INFORMATION Shown below is a summary of annual gas and electric revenues for the member entities. HISTORIC ENERGY FRANCHISE TAX REVENUES UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 FISCAL YEAR BRIGHAM CITY CENTERVILLE LAYTON LINDON MIDVALE MURRAY OREM 2014 740,253 835,849 3,836,957 1,250,990 2,102,495 3,645,488 2015 1,051,117 858,683 3,775,194 1,259,381 2,086,631 3,518,888 6,322,744 6,238,725 WEST VALLEY CITY 7,705,249 PAYSON TOTAL (ENERGY) 1,019,442 26,440,025 7,847,940 986,971 26,636,559 2016 1,203,869 872,627 3,916,318 1,312,423 2,192,132 3,586,379 6,454,275 8,065,445 1,077,430 27,605,468 2017 1,230,038 864,741 3,898,959 1,301,408 2,205,527 3,518,071 6,549,235 8,095,002 1,030,903 27,668,376 2018 1,297,465 854,772 3,890,891 1,398,641 2,212,291 3,555,500 6,709,878 8,053,310 1,019,824 27,972,748 2019* 3,710,152 1,356,176 2,115,894 6,787,660 8,108,111 Source: Member Cities * Preliminary, subject to change. PAGE 39 FROM VCHE SE WE PROVIDE SOLUTIONS#41LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION XI: ONGOING NETWORK EXPANSION EXPANSION WITHIN MEMBER CITIES With the utilization of funds from the UIA-Layton bonds, Layton City is now about 70% built-out and will be substantially complete by the end of the year. Additionally, Payson City completed a bond transaction in early Summer 2019 to finance the costs of its remaining infrastructure. EXPANSION BEYOND MEMBER CITIES Interest level by other cities continues to grow О Morgan City and West Point City completed bond transactions in Spring 2019 and Summer 2019, respectively to finance the costs of fiber infrastructure in their cities. О These transactions are self-supporting and governed by separate service agreements and bond documents. A member of the Executive Team meets with a different City almost every week at the invitation of the City. Financial model discussed is one of two options: О The City provides cash for UTOPIA/UIA to build the fiber network; or The City enters into a Service Agreement similar to the Morgan or West Point Service Agreement and UIA will finance the fiber build-out in that City. As other cities come online UTOPIA/UIA will not slow down the buildout in its member cities. UIA has a contract in place with Idaho Falls, Idaho to build and manage their FTTH network. PAGE 40 WE PROVIDE SOLUTIONS#42LYRB UIA TELECOMMUNICATIONS REVENUE BONDS, SERIES 2019 SECTION XII: FUTURE PLANS FOR UTOPIA/UIA SUMMARY BUILDOUT FOR EXISTING MEMBER CITIES UTOPIA/UIA has a plan in place that calls for completion of fiber build of the member cities within three to four years. ADDITIONAL UTOPIA/UIA DEBT UTOPIA/UIA anticipates the need to issue approximately $39M (after the issuance of the Series 2019 Bonds) to complete the buildout to its member cities. UTOPIA/UIA anticipates issuing these bonds within the next 18-24 months. PAGE 41 WE PROVIDE SOLUTIONS