New Business Model June 2-3, 2011 Beirut, Lebanon 2017/4/21 Tony Huang Director, CTO Office Middle East Huawei Technologies June 2-3, 2011 Beirut, Lebanon

Balance Sheet Re-engineering Operators are facing both operational and financial challenges under the fierce competition environment Challenges Requirements High Debt Ratio High finance fee Balance Sheet Re-engineering High OPEX High Operation cost Lower OPEX solution High Churn rate Intense competition Inefficient loyalty program Faster go-to-market Balance Sheet Reengineering：通过融资解决方案来改变资产结构，比如所有者权益与固定资产等 High CAPEX High investment on new services Risk sharing

Operators are seeking Vendors to provide Business solutions to address their Business requirements Balance Sheet Reengineering Lower OPEX Solution Faster go-to-market Risk sharing Financing Solution 1 √ Hosting Solution 2 √ √ √ Revenue Sharing √ √ 3 Managed Services 4 √ √

Finance solution helps operator improving its financial performance in the Capital market Financing solution Hosting solution Revenue sharing Managed services Key Financial index Debt / assets, net debt / equity, net debt / EBITDA EPS and P/E Ratio compared with the regional peers High CAPEX / Sales Ratio leads to Negative FCF Challenges Debt Covenants Leverage Impact Profitability Growth Free Cash Flow CAPEX Intensity Operation Strategies Debt / assets, :资产负债率，负债与总资产比例 net debt / equity：净资产与所有者权益 Debt Covenants ：借贷条款：比如不准再借给别人等等 Leverage：通过扛干作用，来降低leverage,比如net debt/equity 资产=所有者权益+负债 De-leveraging to rebuild financial strength to improve the Public Rating：降低扛干系数，提高比如普尔评级 De-leveraging to rebuild financial strength Revenue stimulation and Cost reduction Transforming CAPEX structure to reasonable CAPEX / Sales Ratio

Operator should work with a vendor who has strong financing capability to offer customized solutions Financing solution Hosting solution Revenue sharing Managed services Buyer’s Credit Strong support from institution: a vendor being supported by powerful finance institutions; Respond quickly and innovative: drives innovative financing solutions in line with customer objectives; Professional service: staffed by professional financing managers providing a first class service to customers Seller’s Credit Project Finance AR Financing Leasing & Off Balance Sheet Solutions AR Financing: accounts receivable financing 应收款融资 Leasing & Off-Balance Sheet Solutions： 表外融资 What is off-balance-sheet financing? Off-balance-sheet financing is a situation where you can acquire equipment without it appearing on your balance sheet*. There are a number of advantages to be gained from off-balance-sheet financing, as noted below. What does it mean to say that equipment doesn't appear on my balance sheet? It means your new equipment is considered neither an asset nor a liability. Off-balance-sheet financing can occur when you acquire your equipment through an operating lease. What are the advantages of off-balance-sheet financing? The advantages are significant: Off-balance-sheet financing generally has no effect on your borrowing capacity. (An installment loan, on the other hand, reduces the amount you can subsequently borrow.) You'll see a higher reported return on your assets. Your finance ratios should remain intact. (When you get a loan, the equipment goes on the asset side of the balance sheet and the loan appears on the liability side. This generally changes your finance ratios, often for the worse.) Syndicated Loan： Syndicated loan: 银团贷款| 集团贷款| 组合贷款| 财团放款. Syndicated Loan

Increasing cost efficiency Hosting services helps operators focus on core business, lower OPEX and improve service offerings Financing solution Hosting solution Revenue sharing Managed services Enhanced Focus Effective service aggregation Increasing cost efficiency Improves financial and operation efficiency, Enable operators focusing on their core business objectives OPEX Split by Network & Service Area Network and Services Maintenance 25-30% Service Deployment 20-25% Shares risk by using “Risk Sharing” agreements which is based on the service revenue Network and Services Operation 15-20% Logistics & Spare parts 10-15% Systems O&M 5-10% Provides total communication solution and accelerate the TTM of new services Planning 5-10% Core business New Services Design 4-5%

Hosting services can be sub-divided into 5 layers, ranging from Network equipment to Operation supports Financing solution Hosting solution Revenue sharing Managed services Operation Business consulting, and Operation support Management SP / CP management and support Application Integration of application and service Platform Running, maintenance of service platform, i.e. SDP, CDN Network Provision of hardware platform and software

Business Model Description Revenue sharing model helps operators launching new services quickly and limiting their risk Financing solution Hosting solution Revenue sharing Managed services Revenue sharing Business Model Description Max revenue sharing curve: protect operators’ benefit Min monthly fee line: protect vendors’ benefit Payee Period: usually 3-4 years Payee Fee is linked to service revenue or traffic The detailed covenant is related to equipment value plus business commitment $ Key Benefits Maximum revenue sharing curve Faster Time-to-Market Risk sharing Align costs with benefits Improve cash flow and liquidity Facilitate budgeting control Off -balance sheet financing Assumed Payee Fee curve Minimum monthly fee line Launch Year-1 Year-2 Year-3 Year-4

This model is similar to “pay as you grow” Network leasing from third party could reduce large upfront CAPEX investment for operator Financing solution Hosting solution Revenue sharing Managed services Revenue Sharing Model Leaser Network Owner Operator Network User Right-to-use Network Equipment Payments Vendor Network Supplier Frame Work Agreement Equipment Supply This model is similar to “pay as you grow”

Scope of Managed Services Managed services business model is well proven working for many operators for many years Financing solution Hosting solution Revenue sharing Managed services Scope of Managed Services Network Operation Power / Transmission / Site acquisition O&M / Spares / Support / Training Network Operation Network KPI Network KPI measure and improvement Strategy and Planning Operation Support System Business Support Systems IT (ERP, OA, etc...) VAS (SDP, SMS, WAP...) Core Business Finance, G&A IT & App. Marketing & Sales NRO: Network Rollout CRM: customer relationship management CEM: customer experience management CRM and CEM With the managed service, operator can focus on its Core business, Reduce OPEX, Improve Network Quality thus making Performance Predictable.

Managed services process can be divided into transition and operation stages Financing solution Hosting solution Revenue sharing Managed services Service Responsibility Transition Employee Transition Asset Transition Infrastructure and Facility Transition Contract Transition Due Diligence Pre Transition Stabilization Transition Phase Transformation Continuous Improvement Operation Phase Service Management IMS (Infrastructure Management Services) AMS (Application Management Services) Solution Evolution Services BOS (Business Operation Services) Service / Help Desk Due Diligence 尽职调查 Focus on the core business; Manageable & predictable OPEX; Accelerate technology evolution; Business Transformation for increasing competitiveness

Looking into the Future, We See Beyond Telecom… Beyond Voice booming mobile broadband is the next engine of telecom Beyond Population the Internet of Things is creating a large subscriber base In the next five years… 2.5 billion MBB users，680 million FBB users 300 million wireless M2M users， 120 million IPTV users 270X MBB traffic，5X FBB traffic US$ 100 billion data center market Beyond Telecom home networks will open new markets to operators because of the disruptive user experience Beyond Bit-pipe cloud computing brings new opportunities driven by a new business model Source: MBB users is from “Ovum”, FBB users is from “broadband trends”; M2M users is from “berg insight”, IPTV users is from “MRG” , Traffic and Data centre market is from IDC

Highlights of Huawei Technologies 28 CAGR：34% 21.8 18.3 12.8 8.5 6 2005 2006 2007 2008 2009 2010 We are serving 45 of the top-50 telecom operators worldwide; We provide end-to-end ICT solutions in Network, Software, Devices and Professional Services

Our Global Presence ensures Supports Everywhere HUAWEI TECHNOLOGIES (Headquarters) Huawei Headquarters R&D center Technical support center We have a global presence covering more than 100 countries with 95,000 employees worldwide, where 60% of the overseas staffs are hired locally, similar to HSBC, we are also an international local vendor. 22 regional HQ, 100+ branch offices 17 R&D centers (40,000+ R&D employees), 36 training centers 95,000 employees worldwide Contract Sales exceeded USD 30 billions (2009) Global 500 Corporations - ranked 397 in 2009

We achieved Sustainable Growth in Middle East Region Progressive Contract sales of US$2.7 Billion (2010) Responsive 2800+ highly qualified employees, with 60% local staff 11 branch offices, serving 13 countries customers and their business globally Innovative Leading Solution Provider in Telecom Market including Fixed, Mobile and All IP ; Solutions for Enterprise Market ; Our business scope also includes Software & Applications, Devices & Terminals, and Professional services Lebanon Jordan Kuwait Iran Saudi Arabia Afghanistan Pakistan Oman United Arab Emirates Qatar Bahrain Iraq In the Middle East, we have achieved sustainable growth in the past years, at present, we have Exceeded 2.3 billions contract sales in 2009; Over 2,800 staffs with 60% being locally hired; We understand enterprise market is complex and we are more than willing to cooperate with the reputable partners to achieve win-win-win situation among our partners, our customers and Huawei. Thank for your time and it concludes my presentation today.

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