Idt Corporation · NYSE:IDT
Idt — Merger or Acquisition (July 2013)
32 slides from Idt's merger presentation, Jul 12, 2013
Slide 1: Unlocking Value through the Spin-Off of Straight Path Communications, Inc.
IDT Corporation (NYSE: IDT) [ IDT Unlocking Value through the Spin-Off of Straight Path Communications, Inc. July 12, 2013
Slide 2: Forward-looking statements
This presentation contains forward-looking statements, Statements that are not historical facts are forward-looking its made pursuant to the Safe Harbor Provisions of the Private Secarties *ngeton Reform Act of 1088: xamples of forwards -looking statements include: statements about IDT’s and Straigh
Slide 3: Market Basics
Market Basics Ticker NYSE: IDT Stock Price* $19.88 Highlights: Statements of Operation & Cash Flows Shares Outstanding 22.9 million (77M for 12: months ended April 30th) Market Cap’ $455 million femme tS) 3013-4012 3912-4011 *As of 7/10/2013 $1508 $1483, (ae EBITDA $33.2 $23.3 1€ from operations. $2
Slide 4: IDT has consistently incubated and monetized high potential businesses
IDT has consistently incubated and monetized high potential businesses: ¢ Net2Phone (formerly NTOP on NASDAQ): AT&T invested $1.1 billion for a 32% share in 2000; * Corbina Telecom, IDT’s Russian telecom business: Sold for $130 million net in 2006 ; *IDT Entertainment: Sold to Liberty Media for $186
Slide 5: IDT Organization
Slide 6: Verticals
Verticals IDT. Retail: Markets, distributes and sells prepaid phone and payment products + Targets immigrant communities via global distribution network of 200,000 retailers from “bodegas” to major US retail chains including Costco, CVS and Walgreens Wholesale: Terminates international calling traff
Slide 7: Boss Revolution Platform
olution Platform IDT’s Boss Revolution platform provides voice and payment services primarily to immigrant communities: * Current products * International calling * Mobile top-up - recharge your own prepaid account * International mobile top-up - transfer minutes purchased in USA to mobile phones ov
Slide 8: Calling Card Company
Calling Card Company For many years, IDT’s core business was distribution and sale of prepaid, disposable calling cards In 2009, IDT introduced Boss Revolution Today, a majority of retail revenues are generated through the Boss Revolution payment platform Total Retail Communications and Platform Ser
Slide 9: Video Storage, Processing & Delivery Platform
| Video Storage, Processing & Delivery Platform Superior technical solution for video applications * Cloud based DVR * Deep video storage * Video streamin; + Advanced advertising (ad insertion & targeted ads) Current deployments / customer wins + US Tier One cable operator's cloud-based DVR offering
Slide 10: IDT.
IDT. relevant, high quality games, apps and I ree etc. ") I = ° d PP Google Play and IMM+ Facebook: “lakes! Pr ‘oprietar’ t 1, behavioral < dad vel y eng! recommendations high value customers * “Werdel itt Yahoo and Microsoft * Cash flow breakeven
Slide 11: Straight Path Communications
h Communications SPCI is a low CAPEX, low OPEX business built around two intangible assets with significant upside potential: * Straight Path Spectrum (SPS) - Holds and licenses a significant number of FCC licenses for commercial, fixed wireless spectrum with deep coverage in the 38GHz spectrum band
Slide 12: Fundamentals
Fundamentals IDT intends to spin off SPCI to IDT stock holders at ratio of one share of SPCI common stock for every two shares of IDT common stock. SPCI management will exclusively focus on realizing the value of its intangible assets. SPCI will be spun off with $15 million in cash SPCI intends to d
Slide 13: Straight Path Spectrum
| Straight Path Spectrum
Slide 14: As 4G becomes ubiquitous, demand for bandwidth is expected to increase fourfold
As 4G becomes ubiquitous, demand for bandwidth is expected to increase fourfold Industry needs alternatives to fiber for backhaul Challenges of cost, positioning and reliability abound Significance shifts from coverage to capacity
Slide 15: Small cell backhaul demand
AT&T: Announced plans to deploy at least 40,000 small cells by 2015 and has indicated that this number may increase. Wireless industry may require millions of small cells nationwide. Fiber: Prohibitively expensive for small cell backhaul, Most cost effective choice for small cell backhaul: 150 MHz,
Slide 16: Largest 38 GHz Holder in US
st 38 GHz Holder in US * >600 MHz in top 25 EA’s with minimum 200 MHz in virtually all markets. ¢100 MHz contiguous blocks. * Substantial service requirement met through 2020. + Also 15 LMDS licenses in the 28 GHz band
Slide 17: Differentiators
e | Differentiators National solution - SPS is the largest holder of 38 GHz licenses with a portfolio uniquely suited to enable comprehensive national wireless backhaul solution for small cell deployment. Concatenation of 50 MHz channels - Larger serving channels (i.e. supports 150Mhz wide channels)
Slide 18: Spectrum Acquisition Milestones
ation Milestones * Spectrum licenses were initially acquired by Winstar Communications. * IDT acquired licenses and other assets from Winstar Bankruptcy Estate in 2001 for $60 million. ® In March 2012, IDT sold four 38 GHz and four 28 GHz spectrum licenses covering certain metropolitan areas for $6.
Slide 19: Spectrum strategy
Align system integrators and equipment manufacturers to support nationwide 38 GHz based backhaul solution for small cell deployment. Leasing and licensing, rather than sales and assignments, are preferred options for long term growth. Low CAPEX and OPEX. Small cell test bed deployment with key integ
Slide 20: Straight Path IP Group
| Straight Path IP Group
Slide 21: Patent Holdings
Patent Holdings * SPIPG holds family of patents widely utilized in communications over the Internet as well as for real-time peer-to-peer video chat and multi-party video conferencing. * Prior litigation and extensive re-examination has confirmed the validity of key patent claims. * Patents expire S
Slide 22: Patent '704, Claim 33
atent ‘704, Claim 33 ® Claim 33. A method for locating processes having dynamically assigned network protocol addresses over a computer network, the method comprising, the steps of: + a. maintaining, in a computer memory, a network accessible compilation of entries, selected of the entries comprisin
Slide 23: Milestones
Milestones In 1996, IDT founded Net2Phone, which helped pioneer VoIP communications. In 2000, Net2Phone purchased NetSpeak, which held key patents, for $48 million. In 2000, AT&T invested $1.4 billion for a 32% share of Net2Phone. In 2006, IDT repurchased the portion of Net2Phone’s capital stock tha
Slide 24: Business Approach
usiness Approach SPIPG has retained counsel to pursue enforcement ona contingency basis. SPIPG intends to aggressively pursue enforcement. In addition to direct users of the IP, equipment manufacturers and others who derive benefit from our technology are potential licensees. By initially establishi
Slide 25: Pro Forma Financials
. Forma Financials IDT. /NAUDITED PRO FORMA COMBINED FINANCIAL DATA asf April2, 201d for ated te - i 31/2012 and 2011 , pa M3013 20, 2013and ancaniblis SPCIs Form 10 opinion 2 - these pees April 30,2013. Te operations for ‘pel M3013 . vam transfor SPCL ofall of the SPC, the contribution by IDT prior
Slide 26: Pro Forma Balance Sheet
is 4 Balance Sheet IDT. __Pte Forma Balance Sheet
Slide 27: Statement of Operations
STRAIGHT PA’ Statement of Operations )OMMUNICATIONS, INC. PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS ENDED API ‘OR THE NINE MONTHS bound ep per hare us) Gunaudited) Direct cost of revenues sere and admire igs in wl opi. ton sem ons. for income tanss Provision for nce tes. Netloss Net loss a
Slide 28: Statement of Operations
19 Sta STRAIGHT PATH COMMUNICATIONS. INC. PROFORMA CONDENSED COMBINED STATEMENT OF OPERATIONS FOR THE YEARENDED LY 3 sands, ex esp uted) Historical Revenues s 88 Cont and espenses rect ost OF eve 9 ing teal mira 4.010 “otal costs and To Gain on sale of igs in nie spectrum $330 come from 4781 Other i
Slide 29: Notes and Management's Assumptions
STRAIGHT PATH COMMUNICATIONS, INC. NOTES AND MANAGEMENT'S ASSUMPTIONS ro ‘CONDENSED C STATEMENTS (Woaudited) (A) tn eemecton wih he planed spf IDT wil wan ah wo SCI pio 0 he nif hat will have approximately $15 million the time ofthe spf This ash wanser teesed an IDT ade he os contro 0 SPC on Ap 0,2
Slide 30: Non-GAAP Financials
f Non-GAAP Financials IDT. Reconeiliation of Non-GAAP Financial Measures lance f ). 1DT's invest EBITDA and Free Cash Flow, which are non-GAAP financial measures, ‘Generally, a non excludes or ‘accordance with GAAP. iors nthe way of alli Adjusted EBITDA Bfimpairment, nce charges and net and deduct (
Slide 31: Non-GAAP Financials
f Non-GAAP Financials Non-GAAP Financi ti i usinesses 14s a number of matters under litigation, such claims, sales, ai ‘eack y pet of IDT sor he relevant segments core operating ruts The ether eateatation of Adjusted EBITDA consists of gross profit less selling, general and administrative expense, a
Slide 32: Non-GAAP Financials
f Non-GAAP Financials Highlights: Statements of Operations & Cash Flows (in millions of USD) Adjusted EBITDA Subtract (Add): Depreciation and Amortization (Gains) losses on settlements and other, net Income (loss) from operations Free Cash Flow ‘Add: capital expenditures Net cash provided by operati