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Investor Presentation (NASDAQ: CCIH) Content-aware Network Services ChinaCache International Holdings Ltd.

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Page 1: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Investor Presentation

(NASDAQ: CCIH)

Content-aware Network Services

ChinaCache International Holdings Ltd.

Page 2: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Disclaimer

This presentation has been prepared by ChinaCache International Holdings Ltd. (the “Company”). This presentation is being presented solely for your information and is

subject to change without notice. The information included herein was obtained from various sources, including certain third parties, and has not been independently

verified. No representation or warranty, expressed or implied, is made and no reliance should be placed on the accuracy, fairness or completeness of the information or

sources presented or contained in these materials. By viewing or accessing the information contained in these materials, you hereby acknowledge and agree that neither

the Company, nor any of their respective directors, officers, employees, agents, affiliates, advisers or representatives accepts any responsibility for or makes any

representation or warranty, express or implied, with respect to the truth, accuracy, fairness, completeness or reasonableness of the information contained in, and

omissions from, these materials and that neither the Company, nor any of their respective directors, officers, employees, agents, affiliates, advisers or representatives

accepts any liability whatsoever for any loss howsoever arising from any information presented or contained in these materials.

This presentation contains forward-looking statements, including statements about industry development and the Company’s business outlook, strategy and market

opportunity, and statements about the Company’s historical results may suggest trends for its business. These statements are forward-looking statements within the

meaning of the U.S. securities laws. These forward-looking statements are made only, and are based on estimates and information available to the Company, as of the

date of this presentation. These forward looking statements are not guarantees of future performance and are subject to risks, uncertainties and assumptions that are

difficult to predict. You are cautioned that actual results of the Company may differ materially from those set forth in the forward-looking statements herein.

NOTHING HEREIN CONSTITUTES AN OFFER OF OR THE SOLICITATION OF AN OFFER TO BUY THESE SECURITIES IN ANY STATE OR JURISDICTION WHERE SUCH OFFER OR

SOLICITATION OR THE SALE OF THESE SECURITIES IS UNLAWFUL.

These materials are highly confidential and are being given solely for your information and for your use only in connection with this meeting. The information contained

herein may not be copied, reproduced, redistributed, or otherwise disclosed, in whole or in part, to any other person in any manner. By viewing or accessing the

information contained in these materials, you hereby acknowledge and agree to keep the contents of this presentation and these materials confidential.

2

Page 3: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Stock Summary

As of April 26, 2013

NASDAQ: CCIH

Share Price (4/8/2013) $ 3.64

Basic ADS Outstanding 22.8 million

52 Week Price Range $3.50 - $6.00

Market Cap $83.0 million

Enterprise Value $32.1 million

Adjusted EBITDA* (TTM*) $11.1 million

EV/adjusted EBITDA (TTM*) 2.9

Auditor Ernst & Young

• Defined as EBITDA before share-based compensation expense, foreign exchange loss or gain, post acquisition settlement consideration and impairment of goodwill, if any, and

acquired intangible assets

• Enterprise Value based on 4/8/13 closing market cap and cash balance as of 12/31/12

• TTM refers to the period from January 1, 2012 to December 31, 2012

3

Page 4: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Historical Milestones

The First Company to

Obtain CDN License

Obtained CDN

pilot operation

license from MIIT

2000

1998 2002

2004

2007

2008

2009

2010

2011

2012

Company

establishedGranted the first

CDN operation

license by MIIT

Exclusive provider

for CCTV for the

Athens Olympic

Games

Official CDN

service provider

for the Beijing

Olympic Games

Entered

international

market

Expanded into

mobile Internet

business

October 1, 2010

Successful NASDAQ

IPO

Exclusive CDN

provider to

Premier Wen

Jiabao’s online

chat with

netizens

Established R&D center

in Silicon Valley

Exclusive partnership

with Innovation Works

Content-Aware Network

Services

Joint Lab with

Beijing University

of Post and

Communications

2012

Page 5: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Investment Highlights

5

Location

Network

Growth

� Nation’s largest network with #1 market share in China

� Broad global presence; 14,000 servers and switches in 110+

cities across 14 countries

� Leadership position in the world’s largest Internet market

� Overseas peers are prohibited to operate in China

� Revenue 5-year CAGR 38.4% (2007-2012)

� Favorable Internet population growth trends in China: 356mil in

2011; expected to double by 2015.(1)

� Sizeable opportunity in enterprise and mobile Internet

(1) Source: iResearch 2012

Page 6: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Our Business

Internet and

Software ServicesEnterprises and

E-commerce

Mobile

Internet

Government

Agencies

Total Network

Solutions

Media and

Entertainment

Standard CDN Cloud and MIDS CCIndex Application Dynamic

Acceleration

Mobile Internet

Optimization

6

Total Network

Solutions

Content-aware Network Services

Network-aware Device-aware Application-aware

Page 7: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

32%

10%

2%6%

50%

Market Leader

Dnion

FastWeb

Others

ChinaNetCenter

Source: iResearch China CDN Industry Research Report 2012

China Market Share by Revenue Global Market Share by Revenue

56%

8%

10%

5%

15%

3% 3%

Level 3

Limelight

Others

Edgecast

Amazon

Akamai

Source: MarketsandMarket 2012 and company financials

7

Page 8: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Strong Financial Position

8

No debt

RM

B m

il

21.2 USD

RMB

37.2 38.1

58.4

98.3

Highly Liquid Strong Top-line Growth Debt Free

Cash and cash

equivalents of RMB

317mil (US$50.9mil)

+

Liquid investments

RMB 82mil

(US$13.2mil)

millions

*Calculation of USD amount is based on the average exchange rate during the corresponding period.

161.0

257.6 259.9

395.1

618.4

813.7

2007 2008 2009 2010 2011 2012

130.6

Page 9: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Diversified Customer Base

9

Media &

Entertainment

Enterprises &

E-commerce

Internet &

Software

Mobile

Internet

Government

Agencies

30% 29% 21% 17% 3%Revenue

breakdown,

Q4 2012

Page 10: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Competitive Advantages

Official CDN

Provider for

2008 Beijing

Olympics

China’s Leaders

Online Chat

with Netizens

since 2009

Obama’s Online

Chat with

University

Students

Company Strengths

� Scalability

� Service oriented culture

� Technology innovation

� Brand presence

� Longstanding customer relationships

� Peer relationships with carriers

Established Reputation as China’s Trusted

CDN Provider

10

Page 11: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Demand for Reliable CDN Platform

KR JP HK NL US FIN SP CN

KR JP HK NL US FIN SGP CN

Source: Akamai’s Third Quarter 2012 'State of the Internet' Report

Average Internet Speed (Mb/s)

Average Weekly Hours Spent on the Internet

14.4

13.2 13.1

12.2 12.111.7

China U.K. U.S.A. Canada Germany France Japan

Source: iResearch, IDC, CNNIC, Euromonitor, Screen Digest, Fleishman Hilliard International Communications and Harris Interactive, 2010

CN GB US CA GER FRA JP

14.7

10.59.0 8.7

7.28.5

4.9

1.6

20.5

11

� Despite spending more time

online than residents of any

other country, Chinese netizens

have the lowest average Internet

speeds among developed nations.

� Dynamics among China’s three

major state-run carriers pose

extra challenges for China’s

internet speed improvement,

creating needs for carrier-neutral

CDN platforms.

Page 12: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

CDN Market Dynamics: China vs. U.S.

78%

40%

0%

20%

40%

60%

80%

100%

U.S. China

* Source: iResearch ; Internet World Stats; CNNIC

50%

7%

0%

20%

40%

60%

U.S. China

VAS

Basic

U.S.

China

12

Internet Penetration

CDN PenetrationCustomer Needs & Growth Drivers

� The CDN Industry in China is still in

the early stages of growth

� We believe it will be a winner-take-all

market

Page 13: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Our Growth Strategy

Enterprise

Customers

Mobile

InternetCloud

Big Data13

Page 14: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

28.9%19.0%

12.3% 9.1% 8.5% 10.2% 9.3%

97.5%

30.0%17.5%

26.7%

15.7% 15.5% 18.1%

Growth Strategy 1 Mobile Internet

Mobile

Internet

Desktop

Internet

Infancy Growth Maturity Decline

*Source: iResearch 2012

Mobile Internet Users Expected to Surpass

Desktop Users in 2015Mobile Internet in Early Stages of Growth

300

380

460510

560610

670730

120

230

300360

450

520

600

710

0

200

400

600

800

2008 2009 2010 2011 2012 2013 2014 2015

China's Internet Population China's Mobile Internet Population

In millions

14

Page 15: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Enterprises increasingly rely on our solutions to improve the performance, speed and scalability

of their internal networks, as well as their customer and partner-facing online presence.

IssuerFinancial

Institutions

IssuerTravel and

Aviation

IssuerConsumer

Goods

and more … 15

Growth Strategy 2 Enterprise Customers

Page 16: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

The Enterprise Opportunities

in R

MB

Bill

ion

2.9 3.6

4.8

6.3

8.4

10.6

13.0

15.7

0.0

5.0

10.0

15.0

20.0

2008 2009 2010 2011 2012e 2013e 2014e 2015e

E-commerce

Online

ResellersEnterprises

China’s Mobile E-commerce Market 2006 - 2015

16

Page 17: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Growth Strategy 3 Cloud Adoption

CDNCDN

17

� Ongoing growth in cloud creates increased need for intelligent distribution

platforms such as CDNs to guarantee quality end-user experience.

� ChinaCache is currently offering cloud service to over 100 customers as

part of total solutions.

*Source: Gartner 2012

1,563.40

2,712.50

3,698.80

5,117.10

6,524.10

8,485.10

10,461.10

0

2,000

4,000

6,000

8,000

10,000

12,000

2010 2011 2012 2013 2014 2015 2016

Public Cloud Services Forecast, China, 2010-2016 (USD in millions)

Page 18: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

• Industry reports

• Commercial data analysis

• Comprehensive reports on the state of the Internet

• 24-hour real-time data

• Internet speed rankings by carrier and by province

• Website speed score system

• Test my speed

18

Growth Strategy 4 CCIndex/Big Data Development

CCIndex serves as a valuable reference for Internet

users, carriers, governments and website owners

CCIndex has the potential to create a number of new

value-added services for ChinaCache customers

CCIndex – APP download for iOS and Android-based

devices; Website: www.ccindex.cn

CCIndex produces Quarterly China Internet Report

and ranks carriers’ network performance by province

Page 19: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Industry Leading R&D to Capture Market Trends

3 Patents21 Patents

� Mobile Internet Solutions – Intelligent Traffic Reduction (US Patent-Pending)

� Content-aware Network Services – Network-aware; Device-aware; Application-

aware

� CCIndex & Data Analytics – www.ccIndex.cn

� Cloud Extension – Anti-Attack & Transparent Transport Acceleration

Featured

Technologies

Proprietary

Technology

Head of Silicon Valley R&D Center:

Dr. Alexei G. Tumarkin� Strong R&D team with over 350 engineers

� R&D Centers in Beijing, Guangzhou and Silicon Valley

� Joint Lab with Beijing University of Posts

Telecommunications and Hong Kong University of Science

and Technology

3 Patents31 Patent

Applications3 Patents

14 Software

Copyright

Registrations

R&D

Capabilities

19

Page 20: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Strong Organic Growth

Revenue Growth (in Millions) Active Customers

Enterprise & E-commerce

*Calculation of USD amount is based on the average exchange rate during the corresponding period. 20

129204

281

504

775

1265

2007 2008 2009 2010 2011 2012

470301

Total

21.2 USD

RMB

37.2 38.1

58.4

98.3

millions

161.0

257.6 259.9

395.1

618.4

813.7

2007 2008 2009 2010 2011 2012

130.6

Page 21: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

2010 2011 2012

-56.3

-11.5

0.1

-60.0

-50.0

-40.0

-30.0

-20.0

-10.0

0.0

10.0

RMB

-1.8

-8.5

USD

RMB0.0

Improving Yearly Results

Path to Profitability

USD

RMB

USD

2.5

*Calculation of USD amount is based on the average exchange rate during the corresponding period.

*2011 net income excludes one-time disposal gain of RMB 11.1 million.

*2012 net income excludes special provision for bad debts of RMB 17.1 million.21

Stabilizing Gross Margin

30.3% 30.0%31.2%

25.0%

30.0%

35.0%

40.0%

2010 2011 2012

Gross Margin Net Income* (millions)

Page 22: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

“ I believe that we are in the right market,

with the right product at the right time.

Mr. Song Wang, Founder, Chairman & CEO

“There is a tremendous need to improve the

speed, reliability and safety of users’ internet

connections both in China and internationally,

and this need is creating a significant, unmet

demand for solutions such as ours.”

Page 23: 1530 T G2 China Cache - Jefferies Group · Source: Akamai’s Third Quarter 2012 'State of the Internet' Report Average Internet Speed (Mb/s) Average Weekly Hours Spent on the Internet

Email: [email protected]

Website: ir.chinacache.com

en.chinacache.com

NASDAQ: CCIH

THANK YOU

Facebook: ChinaCache

Twitter: @ChinaCache_CCIH

Weibo: e.weibo.com/chinacachecc