CASPIAN TELECOMS 2010 CONFERENCE CASPIAN TELECOMS 2010 CONFERENCE

28-29 April 2010 28-29 April 2010

IstanbulIstanbul

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OutlineOutline

I. The European Bank for Reconstruction and Development (EBRD)I. The European Bank for Reconstruction and Development (EBRD)

II. EBRD regional presence II. EBRD regional presence

III. Telecoms, Informatics and Media Team III. Telecoms, Informatics and Media Team

IV. Current state of the Telecoms, Media & Technology marketIV. Current state of the Telecoms, Media & Technology market

V. Conclusions and Contacts V. Conclusions and Contacts

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I. Introducing the EBRDI. Introducing the EBRD

AAA-rated multilateral institution founded AAA-rated multilateral institution founded in 1991 in 1991

Promotes transition to market economies Promotes transition to market economies in 30 countries from central Europe to in 30 countries from central Europe to Central AsiaCentral Asia

The largest lender and private equity The largest lender and private equity investor in the regioninvestor in the region

Owned by 61 countries and two inter-Owned by 61 countries and two inter-governmental institutionsgovernmental institutions

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EBRD at a glance EBRD at a glance

Capital base of €20 billion places Capital base of €20 billion places EBRD amongst the world’s largest EBRD amongst the world’s largest financial institutionsfinancial institutions

With capital exceeding asset base With capital exceeding asset base EBRD has the resources and EBRD has the resources and commitment to:commitment to:

– strongly increase investments strongly increase investments across its sectors of operation; andacross its sectors of operation; and

– continue to assist its clients continue to assist its clients changes in economic conditions changes in economic conditions notwithstandingnotwithstanding 0

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1216202428323640

'00 '01 '02 '03 '04 '05 '06 '07 '08 '09

Cumulative commitments €47 billion

Unaudited January 2009

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EBRD in 200EBRD in 20099 … …

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1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

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35

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Debt ABV Equity ABV Net Cumulative Business Volume

Private sector > 77% of portfolio

Debt 78%, Equity 22% of portfolio

€8.1bn invested in 2009

Invested over €47bn in more than 2,700 projects since 1991

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Net cumulative volume by sectorNet cumulative volume by sector

Financial Institutions 34%

General Industry

13%

Agribusiness 9%Natural

Resources 5%

Property & Tourism

4%Telecoms 7%MEI 6%

Power & Energy

9%

Transport 13%

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Active in all countries of operationsActive in all countries of operations

Cumulative commitments €47 billion

Southeast Europe21%

Central Asia7%

Central Europe & Baltics 29%

Eastern Europe & Caucasus15%

Russia 27%

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EBRD’s ObjectivesEBRD’s Objectives

To promote transition to market economies by investing mainly in the private sector

To mobilise domestic and foreign capital: multiplying effect

To foster a competitive environment

To stimulate and encourage the development of capital markets

To encourage environmentally sound and sustainable development

To foster the transition of 30 countries from Central and Eastern Europe to Central Asia towards open market-oriented economies

Focus on quality, efficiency, concrete results and return on investment (financial, economic, environmental)

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In its Operations, EBRDIn its Operations, EBRD

Follows Sound Banking Principles

Supports but does not replace private investors

Promotes market-oriented changes in its clients and reforms in sectors or the whole economy

Encourages environmentally sound and sustainable development

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Equity and equity-linked Equity and equity-linked instrumentsinstruments

– Small equity positions as Small equity positions as part of project financingpart of project financing

– Private equity placementsPrivate equity placements– IPOs and secondary equity IPOs and secondary equity

offeringsofferings– Investments in equity fundsInvestments in equity funds

… … Offering a Wide Range of Products ... Offering a Wide Range of Products ...

DebtDebt– Project finance or corporate Project finance or corporate

loansloans Senior debtSenior debt

– Lender of record status for Lender of record status for syndicated loanssyndicated loans

Subordinated debtSubordinated debt

A long-term partner for clients, NOT a fee-driven advisor or speculative investor

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Funding PrinciplesFunding Principles

EBRD is a flexible, commercially-oriented provider of fundingEBRD is a flexible, commercially-oriented provider of funding , , which is partly or wholly unavailable from commercial banks.which is partly or wholly unavailable from commercial banks.

EBRDEBRD provides funding independently or as a lead or co-lead provides funding independently or as a lead or co-lead arranger in banking syndicates. EBRD has extensive syndication arranger in banking syndicates. EBRD has extensive syndication experience.experience.

EBRD funds up toEBRD funds up to

– 35% of total project costs for a greenfield project35% of total project costs for a greenfield project

– 35% of long-term capitalisation of an established corporate35% of long-term capitalisation of an established corporate

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EBRD Preferred Creditor StatusEBRD Preferred Creditor Status

EBRD’s Preferred EBRD’s Preferred Creditor StatusCreditor Status

EBRD has Preferred Creditor EBRD has Preferred Creditor Status in respect of transfer and Status in respect of transfer and convertibility risk (Art. 21 of theconvertibility risk (Art. 21 of theAgreement Establishing the Agreement Establishing the EBRD)EBRD)

TestedTested in Russia, August 1998 in Russia, August 1998 - Payments to EBRD were - Payments to EBRD were exempt from the transfer and exempt from the transfer and convertibility moratoriaconvertibility moratoria

EBRD Loans are:•not subject to restrictions on conversion of local currency or transfer of foreign currency

•not included in any general rescheduling of the country’s foreign currency debt•generally exempt from country provisioning requirements•exempt from withholding tax on interest

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EBRD A / B Loan StructureEBRD A / B Loan Structure

EBRD acts as a lender of record EBRD acts as a lender of record for the entire syndicated facilityfor the entire syndicated facility

EBRD retains at least 35% of the EBRD retains at least 35% of the loan for its own accountloan for its own account

EBRD receives payments and EBRD receives payments and passes them on to syndicate passes them on to syndicate participantsparticipants

Improved financing terms Improved financing terms through syndicate’s access to through syndicate’s access to Preferred Creditor StatusPreferred Creditor Status

Loan Participants

EBRD

BorrowerBorrower

Participation

Agreement

Loan Agreement

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II. EBRD regional presenceII. EBRD regional presence

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A network of 36 offices in 30 countries More than half our bankers based in the region

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Now in TurkeyNow in Turkey

In October 2008 the EBRD’s shareholders decided to accept Turkey as country of operations

Istanbul office has been opened in 2009

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III. Telecoms, Informatics and MediaIII. Telecoms, Informatics and MediaTeam (TIM)Team (TIM)

Visit us at: www.ebrd.com/telecoms.htm

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Where are we at the EBRD?Where are we at the EBRD?

Telecoms, Informatics and Telecoms, Informatics and Media Team Media Team

• Key sector for the EBRDKey sector for the EBRD

• 7% of cumulative commitments7% of cumulative commitments

• Dedicated team of 12 bankersDedicated team of 12 bankers

EBRDEBRD

BankingBanking

Finance and TreasuryFinance and Treasury

Legal, Economics, Support UnitsLegal, Economics, Support Units

Corporate Sector GroupsCorporate Sector Groups

Country Business GroupsCountry Business Groups

InfrastructureInfrastructure

Energy Energy

Financial InstitutionsFinancial Institutions

Telecoms, Informatics and MediaTelecoms, Informatics and Media

AgribusinessAgribusiness

Property and TourismProperty and Tourism

Central EuropeCentral Europe

Russia and Central AsiaRussia and Central Asia

SE Europe and CaucasusSE Europe and Caucasus

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Telecom/Media Team PortfolioTelecom/Media Team Portfolio

Cumulative financing to date: Cumulative financing to date: €2.8 billion€2.8 billion

Current portfolio: €0.8 billionCurrent portfolio: €0.8 billion Over 125 deals ranging from a few million to Over 125 deals ranging from a few million to

hundred million EURO in 29 CEE/CIS hundred million EURO in 29 CEE/CIS countriescountries

Projects include:Projects include:

– Mobile telecoms operatorsMobile telecoms operators– Fixed line operatorsFixed line operators– ISPsISPs– Submarine cables operatorsSubmarine cables operators– Terrestrial TV Terrestrial TV – Cable TV network operatorsCable TV network operators– Outdoor advertisingOutdoor advertising– Print mediaPrint media– Software developersSoftware developers– Systems integratorsSystems integrators

Fixed line/Integrated Telcos 41%

Mobile35%

Media/Other24%

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Selected TransactionsSelected Transactions

Albania 2003Loan syndication €85 million (total)€35 million (own account)

Bulgaria 2004Privatisation-Equity, Debt and MezzEquity: EUR 138m; Debt: EUR 196m Mezzanine: EUR 40m (totals)Equity: EUR 17m; Debt: EUR 70m Mezzanine: EUR 3.5m (own account)

Russia 2004, 2006 and 2008Loan facilities up to EUR 420 million (total)EUR 115 million (own account)

Kazakhstan 2005 and 2007Loan syndication for KaR-Tel$130 million (total)$65 million (own account)

Kazakhstan 2003Loan syndication$110 million (total)$60 million (own account)

Albania 2008 Privatisation - Loan syndication€ 100 million (total)€ 30 million (own account)Romania 2007

Loan syndication€ 50 million (total)€ 30 million (own account)

Georgia – Bulgaria 2008 Loan and equity$ 35million (own account)

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Selected Transactions: MediaSelected Transactions: Media

Czech Republic 2002Acquisition debt$35 million (total)$10 million (own account)

Poland 2003Acquisition debt€52.5 million (total)€22.5 million (own account)

Hungary 1997Loan syndication$28 million (total)$14 million (own account)

Russian Federation 2003 to 2005Loan syndication$130 million (total)$ 90 million (own account)

Romania 2003Debt Co-financing$11 million (total)$7 million (own account)

Regional CEE 2006Loan syndication$100 million (total)$ 50 million (own account)

Regional CEE/CIS 2008Equity€ 40 million

Ukraine 2007 Equity€ 22.2 million

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Source: AP

IV. Current state of TMT sector IV. Current state of TMT sector

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State of TMT sectorState of TMT sector

The sector generally proved to be resilient to economic downturns and has shown recovery ahead of other sectors and the economy as a whole.

Decrease in consumer’s disposable income, affected the MOU of mobile operators, renewal of IT durables, but not to the extent expected.

Corporate and Public sector IT budgets reduced to free up liquidity but expected to start coming back to pre-crisis levels over 2010-2012.

Adjacent markets such as advertising has slowed significantly.

TMT sector, being an active user of debt finance, in general managed to extend the maturities or refinance in late 2009 and early 2010.

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Current opportunities in TMT Sector, Current opportunities in TMT Sector, EBRD as a partnerEBRD as a partner

EBRD will continue supporting TMT sector in its investment into various broadband access technologies, both wireless and wireline.

A majority of TMT market players agree that innovation seems to be a strategic lever to recoup. Even during the crisis, people are ready to pay for innovative/disruptive offers: operators should increase their focus on customer value during crisis. EBRD can bring its experience into the innovation projects.

EBRD is not a speculative short-term investor, all projects are of long-term value creation nature.

The Bank expects to see increase in M&A activity and some shift towards strategic investor driven deals versus private equity investor as well as the shift in value creation tactics away from financial restructuring and towards operational improvements – clearly favours companies who know how to drive these synergies.

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V. Conclusions and ContactsV. Conclusions and Contacts

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ConclusionsConclusions

EBRD is the single largest long-term lender and equity investor in the CEE and CIS.

Transactions are tailored to the needs of clients and a variety of financial structures can be considered.

Non-standard structures are welcome.

Despite the recession EBRD remains committed and open for business.

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ContactsContacts

Aziz MuminovAziz MuminovTelecoms, Informatics and MediaTelecoms, Informatics and Media

Senior BankerSenior Bankertel: +7 495 787 1111tel: +7 495 787 1111

e-mail : MuminovA@ebrd.come-mail : MuminovA@ebrd.com