Merging Mitel Networks and Aastra Technologies FAQs for Channel Partners Why has Mitel decided to pursue this merger? We believe there are a number of compelling immediate and long-term benefits for the combined organization, which drove both companies to pursue this deal:. Immediate Growth & Scale in a Consolidating Market. This deal puts the company at the forefront of industry consolidation, ideally positioning Mitel to drive profitable growth and value for our employees, channel partners, customers and shareholders. The new company has the potential for twice the value, revenue, reach, and momentum to drive profitable growth for customers, partners, shareholders and employees now and in the future. US$1.1 billion combined total revenue US$100 million cloud business Global customer base of 60 million end users #1 market share in Western Europe Competitive solutions portfolio to address business of any size Enhanced Financial Scale and Operating Leverage. As standalone businesses, Mitel and Aastra were independently strong, profitable and cash generating. Together, the combined organization has one of the best financial platforms in the industry, with the resources to invest in continued innovation and growth. Immediate Market Leadership and #1 market share in Western Europe and growing market share globally. Combining the geographic strengths of Mitel and Aastra propels the combined organization to #1 provider of business communications in Western Europe. Aastra has a large customer base and a strong, sustained market share position in the European market for enterprise communications. Complementary Geographic Strength. There is very little geographic, channel or portfolio overlap. Mitel is stronger in markets such as North America, UK, Canada, the Netherlands and Australia. Aastra is considerably stronger in markets such as France, Germany, Sweden and Switzerland, countries in which Mitel has only limited market share. We believe that this deal will provide the organization with immediate scale and position as a top tier vendor in several markets. New Channel Relationships and Broader go-to-market Reach. Aastra s channel relationships include long term partnerships with tier one European carriers such as Swisscom (Switzerland), Orange Business Services (France), Deutsche Telekom (Germany), Teliasonera (Sweden), Telecom Italia (Italy), Telefonica (Spain), KPN (Netherlands), Belgacom (Belgium), Telefonica (Brazil), Telmex (Mexico), Telecom Argentina and Brazil Telecom. They also have presence in the Cloud and Hosted space 1
supporting several large US projects including internet2 (i2) for higher Education, AT&T Hosted Voice Services. Their cloud position was further strengthened with the recent acquisition of Swedish-cloud service provider Telepo. Installed Base Opportunity - This merger creates one of the industry s largest installed bases of business communications users (over 60 million) at a time when the industry is on the cusp of a major transition to cloud creating a tremendous opportunity to seamlessly transition this installed base to cloud communications, over time as customers are ready. Growth Portfolio Opportunities. We believe that bringing Mitel and Aastra together will open up new growth opportunities with a significantly expanded portfolio that can scale from small business to large enterprise markets and with a complementary suite of applications including mobility, video, contact center and solutions to leverage the growth in both Lync based environments and cloud based services. What is the company s brand and branding strategy? Internally, the combined company will globally operate under the name Mitel. The external branding strategy of the company has two primary phases. Phase 1 Immediately following deal closure, the company will operate under three brands externally: Operations in the United States, Canada, Latin America, and the Asia-Pacific will be branded as Mitel Legacy-Aastra businesses in Europe, the Middle East and Africa will be branded as Aastra, a Mitel Company The direct business in Germany will be branded as DeTeWe, A Mitel Company Phase 2 The company will transition to a single Mitel brand in all markets, beginning in June 2014. The only exception to this will be the direct business in Germany, which will continue to leverage the brand DeTeWe, a Mitel Company. Instructions on how to update your email signature to reflect the new endorsed brand will be communicated when the deal has closed, and made available on the internal integration portal, Inside Integration which will be launched shortly after the merger closes. Where will Mitel be headquartered? The combined company will be headquartered in Ottawa, Canada. What is the integration plan to bring the two companies together? In a merger of this size there are immediate, near term and long term opportunities to integrate the two companies into a unified organization. This is a process that requires a careful balance 2
of thoughtful planning and timely implementation. It is not a process that will take place overnight or with abrupt disruptions to our channel partners, customers or other stakeholders. While this is an exciting time for both organizations, it is vital that we stay resolutely focused on driving our current business. A small cross-functional integration team with representation from both companies has been established to review our businesses today, evaluate the opportunities, and define the full and detailed integration plan. How does this deal differentiate you from your competitors? Mitel now has the most comprehensive portfolio in the industry, covering the entire customer and market landscape: From platforms, to applications, to devices; From digital to IP to Cloud technologies; For the smallest business to the largest enterprise. Our integrated portfolio gives Mitel a strong competitive advantage and we believe ideally positions s to serve o r c stomers and s pport o r channels globally, regionally, and by vertical; now and well into the future. The combination of the companies creates an enviable product offering which provides customers with the greatest choice in the industry and the best path to cloud. How does the merger impact Mitel s financial structure? As a result of this merger, Mitel has one of the best financial platforms in the industry. The combined organization boasts a diversified $1.1 billion in annual revenue, strong free cash flow and reduced financial leverage. We believe that this is an exciting opportunity that creates the financial scale and operational leverage to drive shareholder value. How will decisions regarding the company s product portfolio be made? In a merger of this size there are immediate, near term and long term opportunities to cross leverage features and capabilities, to add value across the portfolio, and to maximize R&D investment and supply chain. We are taking a very balanced and deliberate approach to maximizing our portfolio assets, defining product migration roadmaps and aligning our R&D investments to ensure we remain consistent with Mitel s b siness strategy to leverage the core, invest in the clo d and rapidly expand in the contact center. A team of lead solutions architects and engineers from both companies have begun the detailed process of mapping out the complete offering - by technology, by customer segment, and by geography. 3
We will be working towards defining a global phone portfolio and a global set of applications by integrating the best of both companies. All portfolio decisions will be made with the following fundamental principles in mind: We will protect and respect customer investments and contracts We will protect channel partner revenue and relationships We will offer a global portfolio and address regional requirements We will protect the revenue and profitability of Mitel All portfolio decisions will be made in close consultation with our staff, our customers and our partners, and all changes to product roadmaps will be announced when it makes sense to do so. As of today, the full portfolios of both companies are available. Will there be layoffs as a result of the merger? As in all mergers of this magnitude, there will be duplication of some functions resulting in redundancies. While there will be some economies of scale, both companies already run highly efficient organization and the majority of employees will not be affected. As part of the integration process, we will be conducting a thorough review of each position to evaluate how it will fit into the new Mitel structure. We understand that employees will want to know the impact of these decisions in a timely manner and every effort will be made to minimize the period of uncertainty. We will communicate with employees as openly and honestly as possible as integration plans develop. Will any existing offices or facilities be closed? As in many mergers of this size and nature, there may be opportunities to consolidate our offices and facilities. As part of the integration process, Mitel will be reviewing our current physical footprint and evaluating the opportunities and risks associated with moving or closing existing facilities and offices. These are not decisions that will be made abruptly and we will be as transparent and open as possible in communicating additional information as it becomes available. Mitel has publically announced that the combined entity is expected to deliver synergies of $50M annually over a three year period. Where specifically within the business is Mitel expecting to capture these savings? A merger is only a strong strategic move if the combined company is able to run more efficiently than either organization on its own. There are three primary areas within the business in which Mitel expects to achieve synergies: 1. Leveraging a combined supply chain and rationalizing distribution. 2. Eliminating overlap in functions. 3. Eliminating duplicate spending across all functions. 4
As standalone businesses, Mitel and Aastra are already independently strong, profitable and cash generating. We believe that achieving the above synergies will provide the combined organization with the resources to invest in continued innovation and growth. Will there be a change in Mitel/Aastra s go-to-market strategy? As of today, there is no change to our existing go-to-market strategies. Our immediate priority is to continue to provide the level of support our channel partners and customers have come to expect from us. As part of the integration process, we will be taking a very balanced and deliberate approach to evaluate our existing go-to-market strategy to contin ally improve Mitel s value proposition to customers and channel partners alike. If changes to Mitel s go-to-market strategy arise, all efforts will be taken to ensure that they are communicated and implemented in a non-disruptive manner. What are the benefits of this merger to me as a channel partner? Why should I continue to work with the combined company? We believe that this is good news for our global partner community. Both Mitel and Aastra have a similar culture and track record of agility, responsiveness and commitment to driving success with channel partners. Our channels s ccess is o r s ccess, and the combined company can provide channel partners and customers access to a significantly expanded and diverse suite of the best-of-breed portfolio that supports all sizes of businesses and enterprises. With little to no channel overlap between the two organizations, the merger could significantly expand the addressable market opportunities of existing partners, equipping them to sell into the small and mid-size business market in local or regional geographic opportunities as well as large global enterprise accounts. As we integrate the two organizations, two of our fundamental principles are to work to ensure that we protect channel partner revenue and relationships while offering a global portfolio that continues to address regional requirements. Decisions will be made with feedback from our channel partners to fully incorporate your experience and understanding of customer-needs and market direction. How will the merger impact my position in the legacy-mitel or legacy-aastra channel accreditation program? As of today, the merger has no impact on your position in the legacy-mitel or legacy-aastra channel accreditation program. In time, efforts will be made to harmonize existing programs. As decisions are made, we are committed to communicating the changes in advance of implementation. What events will be held for business partners in 2014? The Mitel Business Partner Conference (BPC) is the annual event for channel partners in the Americas (United States, Canada, Caribbean, and Latin America). BPC, scheduled for June 5
10 th -12 th 2014, will grow this year to include legacy-aastra partners from across the Americas region. In addition to BPC, Mitel is planning an event for our channel partners in Europe, also targeted for June 2014, to included channel partners from both the Mitel and Aastra channel communities. How will the merger and corresponding shift to the calendar fiscal year impact how a partner s revenue is measured (and consequently how discounts and levels are set)? For the existing Aastra resellers, there will be no change in the way their performance is measured as this is already based on calendar year set objectives. For those Mitel resellers whose performance is c rrently based on Mitel s fiscal year (May to April), the current year s performance will be determined and communicated by the end of April 2014. The upcoming fiscal year will be measured from January 1, 2014 to December 31, 2014. This will result in January, February and March 2014 revenue being used twice for legacy-mitel partners. Will there be any changes to the current sales process? In the first phase of the integration process, the legacy-aastra and Mitel sales processes will remain as they are today. A thoro gh analysis of each company s sales process, c rrently in progress, will highlight the best practices from both operations and identify areas within the current processes to be harmonized. As additional information becomes available, it will be communicated. Will there be a change to the existing channel programs? Immediately following deal closure, there will be no change to existing channel programs. Channel partners will need to be accredited under current Mitel or Aastra channel program guidelines, to sell and support Mitel and/or Aastra products respectively. Over time, the intent will be to harmonize the channel programs into a single framework, providing a consistent approach in terms of channel accreditation and engagement, while accommodating regional market differences. As that effort progresses, we are committed to communicating any changes in advance of implementation. Should I continue to work directly with their current representatives for account management and technical support? Yes. At this time, please continue to work directly with your current representatives for account management and technical support. If changes occur, we will inform you accordingly. Will there continue to be local sales support, or will I have to access a non-local team (i.e. English-only). There will continue to be local sales support services in each geography. Ensuring that our 6
partners have the necessary support is an integral part of our business and will continue to be a priority for Mitel. Will I be able to access my existing Aastra/Mitel extranet account for support? As of today, there will be no change to the existing extranet and support tools. In the upcoming months, we will review the existing systems and tools within each legacy-organization and leverage the best practices of each to create a better experience for our partners. If changes are made to these toolsets, they will be communicated well in advance to allow for a smooth transition process. Will the terms and conditions of existing channel contracts be impacted by the merger? No. As of today, the terms and conditions of contracts will be fully respected. Once the integration process is underway, there will be efforts to harmonize contracts where it makes sense to do so. If any changes occur, it will be done in collaboration with our channel partners. I have a territory agreement. How will it be safe-guarded from existing Mitel or Aastra partners in the same geography? It is Mitel s aim to protect and s pport channel partner s interests as m ch as possible. Territory agreements do not guarantee exclusivity in a sales region. As a result, potential competition in a sales region has always been a natural fact. While in time the two legacy-channel partner programs will be integrated into one, the associated certification programs will continue to be a requirement before resellers gain access to additional products. Will the combined entity maintain its existing distribution partnerships in the US and globally? Yes, Mitel s goal is to protect and maintain existing channel partner relationships thro gho t the integration. How will Mitel handle its channel partnerships where there is duplication in a given geography? There is very little geographic or channel overlap as a result of this merger. Mitel is stronger in markets such as North America, UK, Netherlands and Australia. Aastra is considerably stronger in markets such as France, Germany, Sweden and Switzerland, countries in which Mitel has only limited market share. Isolated cases where there is channel overlap will be reviewed on a case by case basis. If current products are discontinued, how much advanced notice will be given? Existing products within the portfolio will not be abruptly discontinued. Unless we have previously announced otherwise, the company will continue to maintain all existing platforms, products and devices as we evaluate the portfolio and address region specific requirements. In 7
the long term, we are taking a very balanced and deliberate approach to our maximizing portfolio assets, defining product migration roadmaps and aligning our R&D investments to ens re we remain consistent with Mitel s b siness strategy to leverage the core, invest in the cloud and rapidly expand in the contact center. All decisions will be made with the following four fundamental principles in mind: We will protect and respect customer investments and contracts We will protect channel partner revenue and relationships We will offer a global portfolio and address regional requirements We will protect the revenue and profitability of Mitel Will discounts and pricing be impacted by the merger? No, discounts and pricing will not be immediately impacted by the merger. Who should I contact if I have additional questions regarding the merger? Please continue to contact your current account management representative. As additional information regarding the integration becomes available, Mitel is committed to keeping channel partners up-to-date through the usual communication methods email newsletters, channel events, and via the Account Management teams. 8