Introduction to BroadGroup

Information Media Technology and Professional Services company founded 2002 Value chain of consulting and research, publications, and innovative conference brands

Focused on data centre, cloud and IT infrastructure and investment

Brands: Datacloud series, Finance & Investment Forum, Dark Fibre ConventionConferences in Oslo, Monaco, Dublin, Singapore, London, Sydney, Hong Kong Singapore, KL, Johor, Shanghai, Hong Kong & Sydney

Consulting: Commercial due diligence, market and financial analysis M&A, IPOs, financial analysisMarket entry, competitive analysis, market data, vertical opportunities, positioning and strategyEmerging markets research and evaluation; Strategic advice for regional governments, telcos

Publishing: Market Reports

News service – Data Economy (www.data-economy.com) launched October 2016 – 22.7k followers

Markets developing faster than ever - convergence of factors causing investment and expansion

• Competition – expansion of webscales

• Strong growth of ~14% in co-location globally in 2016

• Strong growth drivers

• Regulation on sovereignty and privacy issues forcing proliferation of facilities – in less developed markets toowhich growing from small base – Africa, Asia

• Positive trends such as move to outsourcing, digital transformation and cloud usage growth

• Enhanced investor interest (PE and real estate) and greater understanding of data centres as asset class

Sector Trends

Sector Trends: Development outside main cities

More development of data centres outside capital cities

Recent research –

• France - Strasbourg, Lyon, Marseille

• Poland – Southern Katowice-Krakow corridor

• Japan – Osaka

• UK – outside M1

Distribution by m2 France

Paris Marseille/S. France Strasbourg Lyon Rennes Lille Nantes Bordeaux

Data centre distribution by m2 – Source: BroadGroup

Sector Trends: Development outside main cities: France

Paris 68%

Marseille 7%

Sector Trends: Tier 1 City Markets

Sustained activity at end of 4Q 2016

Amsterdam: Dynamic market continues Double digit growth with established colocation players expanding facilities Number of deals reported in the pipeline

Frankfurt Steady market growth Continued momentum with cloud and especially from international cloud providers Companies from Gulf, Iran, Africa leasing spaceInvestment by Keppel10 “core” data centres in Germany by Vodafone including Frankfurt

London/M25 Growth down on previous quarter Although, ‘business as usual’ post-Brexit amongst many international players there is some slowing in the market

Paris After upward movement in Q3, slower growth in Q4 New opportunities post-Brexit yet to come through

Sector Trends: Fibre

Increased competition in fibre connecting data centres

• Zayo – one to watch – bulk investments in US but has interesting European fibre assets

• CITIC – China/HK owners acquired LINX fibre and data centre assets – CEE/Russia – expansion planned

• Cinia cable – being built into Germany

• Dark Fibre being sought by enterprises

Sector Trends: Asia

Asia markets fast changing; however outsourcing slow and under developed

• Singapore/Hong Kong reaching capacity limits; China expanding

• New Investment SE Asia – Johor (Malaysia), Indonesia, Thailand

• Relatively limited outsourcing, particularly outside markets such as Singapore and Australia, with typically 75%+ of data centre space still in-house – opportunities for growth in co-location

• Data sovereignty, compliance and business/consumer pressures pushing cloud players to build data centres in largest countries

• Strong and growing government/investment agency support

• Growth of cloud, mobile, e-commerce and new Internet businesses driving domestic demand

• 70+ webscale data centres to be deployed in Asia region by 2020

Sector Trends: North America

Hyperscale roll out and active domestic market

• Wholesale data centre market will eclipse the retail by the end of 2017 (Source: CBRE) –Shift being driven by hyperscale cloud

• The prospect of increasing interest rates has created urgency in the market

• 19 separate States offer specific data centre incentives to build locally

• 31MW in current construction pipeline so far this year

• 2 most active markets: Silicon Valley and Northern Virginia

• Capital spending in 2017 is expected to top USD3.2bn driven by the top 5 providers (CoreSite, QTS, DuPont Fabros, CyrusOne, Digital Realty and Equinix) (Source: Wells Fargo Securities)

M&A Investment

m2

Data Centres

USD 12.136 billion*

2,287,687

159

Data Centre M&A Activity Oct16-Mar17 Source: BroadGroup

Recent Global M&A Activity October 2016 - March2017

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3000

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7000

Oct Nov Dec Jan Feb Mar

M&A Oct16-Mar17

Data Centre investment (USDbn) – Source: BroadGroup

*IncludesEquinix-Verizon USD3.6bn49% Global Switch USD2.97bnPE-Centurylink USD2.15bn

Recent Fund Raising and Investment Activity October 2016 - March2017

Fund Raising GDS (IPO) Nov 16 – USD200m

Global Switch (Credit facility)–GBP425m

Kao DC Campus UK – GBP33m

Webscale Investment sustained

Webscale data centre roll out occurring globally

• Google and Microsoft combined have invested USD52 billion in capital expenditures over the past three years, much of that for massive networks of data centres (Source: Wall St Journal)

• Google – will add 10 new cloud data center locations by the end of 2017

• Apple building in Ireland and Denmark (USD1-2bn)

• facebook announced build in Denmark (USD1bn)

So, is there a risk of over-supply?

• Over-supply historically not happened due to funding issues, conservatism, planning/zoning, challenges for new entrants, access to power/suitable sites etc

• New builds often more phased/focused with pre-sold demand

• Signs industry maturing/consolidation

• New entrants starting to develop some new business models from edge/regional plays to vertical market focus to optimized for hyperscale cloud

• But we are still seeing business and financial models with very little differentiation or obvious competitive advantages

• Over-supply could also become supply in the wrong location…

Why is there optimism about demand?

4,7

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15,3

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2015 2016 2017 2018 2019 2020

Global Data Center IP Traffic (Zettabytes per year)

Source: Cisco Global Cloud Index 2015-2020

Traffic up – 55% of all mobile traffic is video - Source: KPCB IOT data generation ~50 billion devices connected by 2020

Every connected car will generate 25 Gb per hour

Impact of IOT on Data Centre

Trends like Augmented Reality, Artificial Intelligence, Internet of Things & more organizations shifting to hybrid cloud models – will drive demand for highly robust data centre infrastructure

• Increased workloads for “bursty” or “chatty” data

• Security, capacity, analytics challenges

• In turn impacts bandwidth – increased fibre requirements

Gradual increase in enterprise outsourcing in Europe

European outsourcing will spur market over next 3 years

• Trend is outsource rather than build- Build is capital intensive- Scale at which you need to build a data centre to ensure its financial viability has become increasing larger- Only feasible if you have requirements of more than approximately 15-17MW

• Data centres often use more flexible modular approach – attractive alternative for enterprises and usually in highly optimised locations and power on “pay as you use” basis

• Outsourcing by enterprises will head towards 50% level by 2020

Gradual increase in enterprise outsourcing in Europe

2227 30

3540

46

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10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2015 2016 2017 2018 2019 2020

Proportion of Outsourced Data Centre Space Westen Europe

In-House Outsourced

Source: BroadGroup

New Business Models expanding market for data centres worldwide

Hyperscales

REITs

Colocation

297

>300

>2k

Telcos >3k

• 24 hyperscale operators worldwide• North America 51%, Asia Pacific 29%, Western Europe 17%,

Latin America 3%

• Majority currently deployed in North America

Hyperscale Global Expansion: Main deployment outside US will be in Asia

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2015 2016 2017 2018 2019 2020

Hyperscale Data Center Expansion

MEAfrica CEE LatAm W Europe Asia Pac N America

Deployment of Hyperscale Data Centres - Source: Cisco Global Cloud Index 2015-2020

MEAfrica 4

CEE 6

LatAm 9

W Europe 30

Asia Pac 75

N America 55

Additional hyperscale data centresfrom 2016 onwards

Alibaba deploying IT assets globally… more to follow

Company HQ Data Center expansion 2016

Alibaba/Alicloud PR of China Asia: Has data centers in Hong Kong, Singapore and USA

Alibaba/Alicloud PR of China Global: Plans data centers in Japan, Europe, Australia,

Middle East by year end

Alibaba PR of China Ireland: Assessed Ireland for new build (€5m per MW of

capacity to build data center)

Alibaba PR of China India: Plans to open a data center in India this year

Alibaba PR of China China: Launched 2 self build/self designed data centers in

Zhangbei County in Zhangjiakou – Hebei Province (part of

going north strategy)

Looking for 1.2b more customers outside of China. August - 20% stake in Thailand's Ascend Money, an e-payment firmExpansion of its data center footprint is critical for its globalization plans

New Hyperscales in Asia - deployment will move outside Asia

Keppel acquiring IT assets globally – key acquisitions in Europe across 2016

New market entrants from Asia into Europe

Keppel DC REIT European Market Acquisitions/Development

Keppel DC REIT (public) Frankfurt: maincubes Data Centre, Offenbach am Main, Frankfurt

(completion 2018) 40% of 20k sqm, 4.8 MW dc

Keppel DC REIT (public) Milan: 15.3k m2 for €37.3m

(Ex BT facility)

Keppel DC REIT (public) London: GV7 Data Centre (“GV7 DC”) in London, United Kingdom

Keppel DC REIT (public) Cardiff: Acquired BT data centre: Celtic Gateway in Cardiff Bay (hosts

internet exchange point) capacity 12k servers (11/2016) GBP34m (Cardiff

DC)

Keppel DC REIT (public) Almere: Data Centre in Almere, (“Almere 1”) Netherlands

Keppel DC REIT (public) Almere: Greenfield data centre, “Almere 2”, Netherlands, 118k sq ft opened

October 2015; green energy from Flevoland Wind Valley

Keppel DC REIT (public) Dublin: Keppel DC Dublin 1 (“KDC DUB 1”), formerly known as Citadel 100

Data Centre, in Dublin, Ireland

Source: BroadGroup

Top 10 European DC Markets by m2 – Source: BroadGroup

Europe Markets m2

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Colocation Revenue (US$b)

Europe MEA Asia Pac North America LatAm

Global Colocation Revenue Forecast to 2020

Colocation Revenue Forecast to 2020 – Source: BroadGroup

Colo Global Revenues USD44b by 2020

Conclusions

Convergence of market drivers causing faster data centre expansion than previously thought

• Enterprise outsourcing will increase in Europe through to 2020; less rapid in Asia

• REIT companies and Webscales will drive a lot of expansion

• Growth occurring within context of IOT over next few years

• Private equity investors, real estate investors becoming even more active in the market

• Scale of investment tipped to go further in 2017