Verizon and Cingular announce huge uptake in data revenues

1
FiberTower Analyst Day

• CTIA Orlando
• March 27, 2007
• 100 pm to 400 pm

2
Agenda

• Introduction (M.Gallagher) 100 pm to 115 pm
• Sales and Marketing (D.Leeds) 120 pm to 140 pm
• Operations (R.Potharlanka) 145 pm to 205 pm
• Technology (M.Finlayson) 210 pm to 230 pm
• Govt and Regulatory (J.Sandri) 235 pm to 255
  pm
• Finance and Admin (T.Scott) 300 pm to 320 pm
• QA 325 pm to 400 pm

3
Senior Management Team
4
Backhaul Opportunity Sizing the Market

T1s per Cell Site (Overall Market)
Mobile Broadband Carriers (US)
Market Size ()
US Cell Sites

5
Backhaul Opportunity Recent Developments
Bear Stearns US Spectrum Trends and Impact on
Tower Business
6
Carriers No one technology will win
3.5 billion market
Site Breakdown
2006
2006
10 billion market
Copper
2010
Sources Stratsoft New Paradigm Internal
Estimates
2010
Copper
Source Internal estimates Stratasoft (10m) 2010
7
Business Update

• Solid Q4 and YE operational results
• Growing significance with our customers
• Went deeper in existing markets began buildout
  of two others
• T1s grew 33 from Q3 to Q4
• Billing sites grew 36 from Q3 to Q4
• Billing sites as a percentage of deployed sites
  increased to 67 from 55 in Q3
• Ended 2006 with approximately 2,000 deployed
  sites and a backlog of approximately 1,600
  customer locations
• Significant customer activity
• Leap signed as 6th major carrier (early
  indications for Q1 2007 results are positive)
• Early indications for Q1 2007 results are positive

8
2007 Objectives

• Field-Level profitability
• Majority of markets field EBITDA positive by year
  end
• Strategic partnerships with carriers
• Larger orders, deeper market penetration
• Reduce Capex Opex
• Implement fiber strategy, reduce equipment costs,
  work with customers on innovative deployment
  methodologies

9
Sales and Marketing
10
Current Sales Environment

• Backhaul has the ear of the top executives at
  each carrier
• 3G/4G deployments, emerging competitors, and
  focus on profitability all make backhaul
  strategic up to the CEO level
• Customers focused on broader market coverage
• Proven business model desire to see broader
  coverage
• Drives greater quality improvements, more opex
  savings, greater backhaul scalability
• FiberTower well positioned in backhaul market
• Fixed-wireless market leader for several years
  established and credible provider
• Competition
• LECs
• We are not seeing much competition from cable,
  fiber or other microwave providers in our
  markets, but do recognize that there could be
  potential players emerging
• Competitive landscape is still being drawn up
  (reality is different from industry buzz)
• Normal sales cycle issues and long-range
  planning

11
Why Carriers Partner with FiberTower

• Network quality less downtime means more
  satisfied customers
• Reduced OPEX and long-term cost management
• Scalability and future proofing
• Customer-focus and responsiveness

• Carrier network executives consistently state
  publicly that backhaul providers have to offer
• the following 3 attributes (in order of
  priority)
• It must be reliable copper is not reliable and
  reliability is as important as cost thats why
  were exploring alternatives
• It must be scaleable copper is at a choking
  point
• It must be cost effective without the first
  two, lower pricing is moot

12
MSA and Contract Process

• National level
• 1- Execute MSA with carrier (can be a 1-3 year
  process). Allows regions and markets to engage
• Scope (National)
• Term of service (generally 5 years)
• Availability MTTR (carrier grade)
• Provisioning time
• Early circuit termination charges (after order is
  executed)
• Market level
• 1- Prioritize and select sites/locations
• 2- Agree on deployment and in service timelines
• 3- Finalize prices
• 4- Execute market level order under MSA
• Process knowledge
• 1- FiberTower knows the process within each
  carrier very well and has executed the proces
  many times
• 2- Average of 3 customers in every live market.
  Key leading indicator for market success and
  profitability

13
Sales and Marketing Organization
Each National Account team assigned to a
specific Carrier Customer
Each Regional Account team assigned to specific
markets
14
Market Operations
15
Current Backhaul Network
FiberTower Site (tower or rooftop)
Customer Location (tenant site)
Sprint
Cingular
Sprint
Cingular
TMO
Sprint
Fixed-Wireless
MetroPCS Mobile Switching Center
Leased or Dark Fiber
Sprint Mobile Switching Center
Cingular
TMO
Cingular
Cingular
Leap
Sprint
FTWR Fiber Exchange Point (FEP)
VZW
TMO Mobile Switching Center
Verizon Mobile Switching Center
Cingular Mobile Switching Center
VZW
VZW
Sprint
MetroPCS
End-to-End Solution (base station to mobile
switching center)
16
FiberTower Market Presence
Cleveland
Detroit
Chicago
Pittsburgh
Boston
NY/NJ
Dallas
Wash DC
Denver
N. Carolina
Atlanta
SAW
Houston
Live Markets- prior to 2006
Tampa/Ft. Myers
Live Markets- 2006 adds
Developing Markets
17
Operations Organization
18
Responsibilities

• Network Planning
• Market Planning and Reconnaissance
• New Designs, Network upgrades, Dark Fiber
• Network Deployment
• Site Development (Surveys, Leasing, Zoning,
  Permits)
• Construction (Ground, Tower)
• Integration and Acceptance
• Operations
• Service provisioning and turn up
• Meet/exceed SLAs
• Maintenance and upgrades
• Customer service

19
Focus Areas

• Network Planning and Development
• FSP cost reduction
• Evolution to Dark Fiber
• Designs for 2008
• Network Deployment
• Add 250 to 300 sites/quarter
• Maintain construction quality
• Evolve deployment model and reduce capex
• Operations
• Meet MTTR and Availability targets
• Turn up T1s per customer commitments

20
Network Deployment

• Infrastructure
• Master Lease Agreements
• Crown Castle, American Tower, SBA/AAT,
  Sprintsites USA, Cingular Sites, T-Mobile Towers,
  Verizon, Global Tower Partners, Highpointe Group
• Master Services Agreements
• Bechtel, Nokia, WFI, Crown Castle
• Local/Regional Relationships
• Regional AE, site acquisition and construction
  companies
• Approach
• Self Manage
• Turnkey
• Hybrid
• Criteria
• Process familiarity and experience
• Quality
• Costs/Speed
• Flexibility

21
Technology and Systems
22
Responsibilities

• Radio architecture
• Access to worlds foremost radio vendors due to
  our spectrum bands
• Partners include Ceragon, Ericsson, Hughes, NEC
  and JRC
• Evaluating architecture enhancements for cost
  cutting or improved efficiencies
• Single site architecture solution to reach more
  cell sites off of existing networks
• Fiber architecture
• Partners include FiberLight, AboveNet, Level 3,
  US Signal, etc
• Nationwide dark fiber initiative
• New technology evaluation
• Creative antenna solutions
• Advanced radio and fixed network solutions

23
Single Site Solution for Deeper Market Penetration
We will employ different technologies and network
designs to reach single sites, including hub and
spoke, Mesh, and PTMP
T-Mobile
Verizon
Sprint
T-Mobile Verizon
Customer Mobile Switching Center
FTWR Fiber Exchange Point (FEP)
Leased or Dark Fiber
Sprint
T-Mobile
Cingular
First deployment of Single Site Solution expected
towards end of 2007
24
The Network Effect

• Goals
• Reach more sites from existing footprint
• Less capex required as sites are added
• Begin to leverage The Network Effect
• FiberTower has built a strong Fiber and Microwave
  infrastructure in major markets across the US
• Significant dollars have been invested in
  providing the highest quality backhaul service
  possible over a large area in each market
• This platform will be used to launch our single
  site solutions at a far more efficient cost
• Re-use existing cabinet and physical plant
  infrastructure
• Greater leverage of Fiber infrastructure drives
  down our per T1 incremental costs.
• Distribute quality related expenditures over a
  greater end user set
• Only operates in our spectrum, no me-too
  solutions from common carrier license holders

25
National Dark Fiber Transition

• Currently transitioning from lit to dark fiber
• More control over network (improved quality)
• Reduce fiber cost per T1 as networks are loaded
• Open new product avenues
• FiberTower has built skill set in OC-48
  electronics as well as DWDM in the past 12 months
  to enable this transition
• FT Dark Fiber Markets today
• Dallas, Pittsburgh, Tampa, DC, Atlanta
• Exploring larger partnerships
• Metro fiber space for dark fiber is still very
  fragmented despite consolidation in the industry

26
Competitive / Co-operative Architectures

• Many technologies exist to provide a bit pipe
  to cell sites
• Copper
• Microwave / wireless
• Dedicated fiber
• To compete requires the implementation of one or
  more of these transport technologies
• To a meaningful number of cell sites
• In a cost / quality relationship that is better
  than what is currently available
• In a scaleable, manageable, technically
  appropriate manner
• As the technology organization we constantly are
  evaluating technologies to deliver this
• Meaningful competition in the market needs to
  meet the above criteria regardless of the
  bandwidth of the pipe
• This market will support more than one
  technology, but it needs to be a backhaul
  service provider, not just an unmanaged
  bit-pipe

27
Why Co-operative Architectures?

• Market forces require significant penetration in
  at least some markets
• Delivering bandwidth to a site is only part of
  the battle
• T1 interface
• Properly synchronized
• Ethernet interface
• Manageable ordering and upgrade process
• OAM visibility
• High reliability / short MTTR
• Co-operative architectures are critical to take
  meaningful business away
• from the LEC
• All sites will need to meet some common
  denominator of services
• Systems and deployment interfaces will have to
  fit in with carriers way of doing business to be
  meaningful in the long term.
• FiberTower success to date enhanced by
• More reliable than the LEC
• Ordering / Management / interface functionally
  identical to the LEC

28
Systems Organization
Ferdi Schell SVP, Systems
Ferdi Schell SVP - Systems

• Responsibilities
• Network monitoring
• OSS
• Customer visibility
• Other backoffice systems

29
Government and Regulatory
30
Regulatory Government Overview

• Responsibilities
• Protect and enhance spectrum assets
• Support sales to obtain key Government contract
  business
• Leverage associations and trade groups
• FCC, NTIA Congressional Advocacy
• Set Regulatory status
• FiberTower Solutions, Inc
• Govt contracts GSA Schedule

31
FiberTower Wide Area Spectrum Assets
Current
FiberTower Markets
Developing
39 GHz
FiberTower Wide Area Spectrum
24 GHz
Detroit
Boston
Pittsburgh
NY/NJ
Chicago
Cleveland
Washington DC
Denver
Carolinas
Dallas/ Fort Worth
Atlanta
Houston
San Antonio/ Austin/Waco
Tampa
32
FiberTower Wide Area Spectrum Assets

• Spectrum portfolio valued at 342 million by
  Houlihan Lokey and Zukin
• 39 GHz footprint covers 99 of the US
• 24 GHz footprint covers the top 77 markets
• FiberTower is the only carrier with both (most
  spectrally efficient)
• 2300 point-to-point spectrum licenses
• Access to common carrier bands 6, 10, 11, 18 and
  23 GHz

 
33
Spectrum Assets Expiration Update

• Only 10 of our wide-area spectrum pops expire
  in 2007, all _at_ 39 GHz  
• We are focused on protecting them, especially in
  the top 50 markets
• Virtually all the remaining spectrum pops (in 24
  and 39 GHz spectrum) do not expire until starting
  in 2010.

39 GHz
24 GHz
103 of 104 licenses expire in 2011, the other
expires in 2015
34
Finance and Administration
35
Compelling Business Model

• Similar to tower operator model
• Growth tied to the rise in cellular voice and
  data traffic
• Long term recurring revenue contracts (5 years)
• Significant operating leverage
• High cash flow generation potential
• High credit quality customers
• High barriers to entry (requires copper, fiber or
  licensed spectrum)
• Low technology risk (agnostic UMTS/HSDPA, CDMA,
  and WiMax)

36
Key Operating Metrics

• Sites Deployed (tower or rooftop)
• The number of sites installed and ready for
  provision of services.
• Billing Sites (tower or rooftop)
• The number of installed sites from which we
  provide T1(s). T1s actually originate from the
  customer location (base station) at that site.
• Billing Customer Locations (base station at that
  tower or rooftop)
• The number of carrier locations (i.e tenant
  locations) at which we currently provide T1(s).
  FiberTower sites could have multiple customer
  locations.
• Billing T1 Equivalent
• A T1 equivalent is either a T1 or another
  increment of bandwidth of approximately 1.54
  megabits per second.
• Colo rate
• The number of customer locations per billing
  site
• Customer Location Backlog
• The number of sold customer locations
  (contractually committed customer locations) not
  yet billing.

37
Operational Metrics Solid Q4 and YE

• 36 quarter-over-quarter increase in both billing
  sites and customer locations
• Percentage of sites deployed that are billing
  grew to 67

38
Operational Metrics Solid Q4 and YE

• T1s billing increased over 33 from Q3 to Q4
• Strong correlation between market maturity and
  T1s per site (Top100)
• Price per T1 remained steady from Q3 to Q4
  (backlog is representative)
• Backlog to be reported semi-annually (1H and EOY)

Backlog to be reported on a semi-annual basis
39
Q4 and FY Income Statement (unaudited)
40
End of Year Balance Sheet (unaudited)

• Cash and equivalents and ST investments net of
  restricted cash of 69m
• Spectrum licenses valued by third party

41
Capex Per Site

• Our direct cost per deployed site continues at
  approximately 65,000
• Total cost pers site for 2006 includes about
  7,000 for internal capitalized labor and costs
  to add new customers on new sites colocation
• Total cost per deployed site in 2006 - 72,000
• For 2007, cost per site deployed is expected to
  remain between 70,000 and 75,000 depending on
  the number of additional customers added at the
  average site
• Capex includes other items that are not
  necessarily site specific
• The cost to begin design and development work for
  sites to be deployed in the next fiscal year,
  what we refer to as pre-spend
• Network upgrades
• Equipment and network spares
• Non-network capex
• Dark Fiber

42
Finance Update

• Expect to spend approximately 100 million in
  capital expenditures in 2007 maintaining our
  current cost per site
• Approximately 250 to 300 new builds per quarter
• Focused on deepening penetration in existing
  markets, while maintaining site builds
• Solid progress in Q4 towards this goal
• Goal is for a majority of our markets to be field
  EBITDA positive by EOY
• Some markets are there already

43
Finance Organization
44
QA