May 2014
Safe Harbor Statements Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: Statements made in this presentation that relate to future plans, events or performances are forward-looking statements. Any statement containing words such as "believes, "anticipates," "plans," "projections," "expects," and similar words, is forward looking, and these statements involve risks and uncertainties and are based on current expectations. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations in such forward-looking statements will prove to be correct. 2
Investment Highlights Fixed Wireless Attractive Business Model Large, High Growth Market Opportunity First Mover Advantage Compelling Financial Profile Delivers wireless broadband access to 3,300 customers in 12 major urban markets in the US Long term rights to prime real estate locations for access to a wide range of wireless communication services Network located on the highest buildings provides wireless backhaul solution for small cells which are located in areas where fiber is not a cost effective solution 5 acquisitions of regional providers completed to date at compelling, accretive values Average lifetime value of customer contracts is approximately 6 years Low variable costs provide significant operating leverage with gross margins exceeding 70% in larger, mature markets Customer ARPU rising steadily to $760 as businesses increase bandwidth to leverage the internet to drive operating efficiencies Reached cash flow profitability in Q1 2013 3
Addressable Market Opportunity Seattle San Francisco Los Angeles Las Vegas Chicago Dallas/Fort Worth Houston New York Philadelphia Miami Currently offer services in 12 markets including 10 of the top 20 US markets. Huge growth potential in existing and new markets Boston Providence 2 Los Angeles 146,683 3 Chicago 98,010 4 Miami 87,036 5 Washington DC 68,304 6 Dallas - Ft. Worth 65,038 7 Philadelphia 63,412 8 Atlanta 62,908 9 Houston 57,092 10 Boston 55,251 11 San Francisco 51,012 12 Detroit 47,155 13 Minneapolis 36,966 14 Seattle 36,914 15 Phoenix 36,228 16 San Diego 32,250 17 Tampa 31,541 18 Riverside, CA 30,053 19 St. Louis 29,983 20 Denver 29,724 1,277,284 Towerstream total in top 20 660,448 Market Presence 52% Source: Gartner Research, Dunn and Bradstreet and Towerstream estimates. 4
New Broadband Service Introduction Now offering 100 Mbps of broadband access for $699 per month. Enabled by increased capabilities of equipment and significant decreases in costs Plan to focus on non-cogent buildings Low latency high quality service Dedicated symmetrical service Quick and easy installation Best value 5
Fixed Wireless Is Faster Than Fiber Electromagnetic waves move faster through the air than through fiber optic cables Fixed wireless links provide the shortest and most direct path between two points Fixed wireless offers a 33% improvement in latency over fiber 6
Fixed Wireless Key Financials $775 $750 Total Customer ARPU $740 $747 $761 $758 $5,000 $4,000 Adjusted EBITDA $4,250 $3,977 Guidance $3,810 $3,756 $3,621 $3,400- $3,600 $727 $3,000 $725 $706 $708 $714 $717 $2,000 $1,000 $700 Q1-12 Q2-12 Q3-12 Q4-12 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 $0 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 Q2-14 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 $- $3,163 $2,949 Net Cash Flow $2,567 $2,596 $2,135 Q1-13 Q2-13 Q3-13 Q4-13 Q1-14 $40 Annual Total Revenue $35 $32.3 $33.4 $30 $26.5 $25 $20 $19.6 $15 $14.9 $10 $5 $- GAAP 2009 2010 2011 2012 2013 EPS $(0.25) $(0.16) $(0.15) $(0.39) $(0.38) 7
Investment Highlights Shared Wireless Attractive Business Model Large, High Growth Market Opportunity First Mover Advantage Compelling Financial Profile US mobile data traffic forecast to increase 9x over next 5 years (57% CAGR) requiring deployment of 500k to 1 million small cells Long term rights to 1,200+ "beach front" rooftops in major US cities offering Wi-Fi access, mobile data offload and 10,000 access points for small cell equipment Neutral host network enables carriers, cable, and internet companies to quickly and cost effectively expand coverage and increase capacity Targeting large customers on a tower-like rental basis Large cable company secured in Q1:13 for NYC International Wi-Fi access provider signed in Q2:14 for all markets Mature rooftop revenue potential of $4-6,000 per month with operating margins increasing to 80% as capacity filled 8
Robust Manhattan Portfolio Towerstream American Tower SBA Communications Global Tower Partners 9
Wi-Fi Seamless Integration (1) Passpoint is the WFA certified implementation of hotspot 2.0, supported by Qualcomm, which enables a simpler, secure and seamless access to Wi-Fi networks. (2) Such as more dynamic control of which traffic to offload to Wi-Fi through device centric and/or network centric solutions. Standards enhancements for RAN network centric interworking approaches considered for R12 and beyond. 10
Wholesale Wi-Fi architecture MNO 1 s Core Network Wi-Fi Radio Access and Smart Mesh Backhaul Network SSIDs MNO 1 Wholesaler s NOC EMS Master View Hotspot Model (WISPr 1.0/2.0) Subscriber Gateway MNO1 View Policy MNO 2 RADIUS Server Captive Portal Accounting & Billing MNO n Retailer Partner and/or... Mobile Network Integration Model HLR/HSS AAA PDG/GGSN/PCEF OCF PCRF Metro Network or 3 rd -Party Backhaul SmartCell Gateway (SCG) MNO 2 s Core Network (as above) Control Data Local Breakout MNO n s Core Network 11
Small Cell Problem / Opportunity Mobile Data Traffic Industry Preparing for 1000x Growth PREPARING FOR 1000x DATA TRAFFIC GROWTH GLOBAL DATA TRAFFIC GROWTH ~2x FROM 2010-2011* *Global growth, some regions grew more/less 12
The Solution 13
Small Cell & Wi-Fi Deployments Accelerating Driven by explosive data growth By 2017 there will be more capacity deployed through small cells than through macro cells globally. Global Mobile Data Traffic Private WIFI Carrier WIFI Small Cells Macro Network Small Cell Shipments Consumer Femtocell Enterprise Femtocell Carrier Grade Small Cells 2009 2010 2011 2012 2013 2014 2015 2016 2017 2009 2010 2011 2012 2013 2014 2015 2016 2017 Small cells and carrier WiFi deployments are expected to account for nearly $352 billion in mobile data service revenues by the end of 2020, while overall spending on HetNet infrastructure is expected to reach $42 billion annually during the same period. Source: Mobile Experts, and Signals and Systems Telecom 14
Street Level Rooftop Revenue Model Wi-Fi antenna (~4 per roof) Microwave backhaul radio (connects to TWER fixed wireless network) Four Principal Revenue Sources: Wall cabinet (in-building) Small cell antenna (TWER can provide backhaul) Wi-Fi Access - Hotspot 2.0 enables unlimited number of customers Co-Location - Small cell antenna rent (BYOD tenant brings their own equipment) Given its prime real estate locations and established backhaul network, Towerstream is an ideal partner for carriers once small cell deployments begin accelerating in the second half 2014. Backhaul - for small cell antenna already installed for Wi-Fi offload Power and other related 100Mb in building services 15
Financial Overview Shared Wireless revenue in Q1:14 represents a 14% increase sequentially and 368% increase from prior year quarter $1.0 $0.9 $0.8 $0.7 $0.6 $0.5 $0.4 Shared Wireless Quarterly Revenue In Millions $0.65 $0.54 $0.74 Guidance $0.80- $0.90 $0.3 $0.2 $0.1 $0.16 $0.20 $- 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 16
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