Telecom and Data Center Services Data Centers Towers RBOCs & Wireless September 18, 2013

1. Telecom and Data Center ServicesData CentersTowersRBOCs & WirelessSeptember 18, 2013 Jonathan Schildkraut Managing Director (212) 497 0864 schildkraut@evercore.com Marc Albanese, CFA Vice President (212) 497 0821 marc.albanese@evercore.com Robert Gutman Snr. Associate (212) 497 0877 robert.gutman@evercore.com Please see the analyst certification and important disclosures at the end of this report. Evercore Group L.L.C. and affiliates do and seek to do business with companies covered in its research reports. Investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

2. 2014 Outlook: Telecom Advertising • Overall, we expect a combination of improving macro trends and increasing competition in wireless to drive an increase in advertising vs. 2013 • U.S. Telco service revenue expected to grow 1.5% in 2014 to $345B • Three Sectors: • Wireless: $212B, 61% of 2014 estimate U.S. Telco spending • Residential: $76B, 22% of 2014 estimate U.S. Telco spending • Enterprise: $57B, 17% of 2014 estimate U.S. Telco spending U.S. Telco Service Revenue Estimate, 2014 (IDC)

3. Wireless in 2014 • Increasingly Competitive Environment Driven by: • Recapitalized Sprint • Re-energized T-Mobile USA • Slowing Subscriber Growth, Increasing Smartphone Penetration, Handset Parity • Emphasis on New Revenue Opportunities - Tablets, Digital Life, the Wireless Internet of Things

4. Wireless in 2014: Increasingly Competitive Environment • VZ and T continue aggressive competition with emphasis on high-end of the market • S is recapitalized following a significant investment from SoftBank • Emphasis over last 18 months has been on "iDEN recapture" as the company transitioned customers off of its old network and onto its new CDMA/LTE network. iDEN shuttered on June 30, 2013 - all subscriber growth going forward will be external. Emphasis on advertising increases dramatically • S to launch hybrid FD/TD LTE Network in 2014. Once network reaches critical mass (expected 2Q14), expect significant increase in marketing • TMUS completed band harmonization in mid-2013, relaunched brand "uncarrier" and began to offer the iPhone • T faces competition at the high-end from VZ and at the low-end from TMUS • Dual messages to market - network quality and value pricing

5. Wireless in 2014: Other Competitive Issues Annual Subscription Growth • Handset parity - with TMUS beginning to offer the iPhone, carriers have less differentiation on handset and must emphasize other points of differentiation, which may be less tangible • Network quality is hard to measure, and pricing plans are difficult to compare • Slowing subscriber growth • Increasing smartphone penetration Smartphone Penetration TMUS iPhone S iPhone VZ iPhone

6. Wireless in 2014: Emphasis on New Revenue Opportunities • Tablets • T: Of the 847K net adds in 1H13, 763K were tablets (+90%) • VZ: Tablets made up +44% of postpaid net adds in 1Q (300K out of 677K) • Shift to shared data plans (18% of postpaid accounts at T and 36% at VZ) help to nudge subscribers into connecting tablets to wireless data plans • Digital Life, Cars, The Internet of Things

7. Residential in 2014 • Residential remains fiercely competitive, but more local in nature • OTT offerings pushes companies to increasingly promote brands out-of-region • Tied to new home formation - which looks to improve with the macro environment

8. Enterprise in 2014 • Enterprise continues to lag as economic weakness has hurt spending and elongated sales cycles • Wireline operations highly levered to improvements in enterprise spending • Expect meaningful increases in spending should macro progress continue

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