Supplemental Earnings Information

Transcription

1 Supplemental Earnings Information Zayo Group Holdings, Inc. Fiscal Year 206 Q3 NYSE:

2 Forward-Looking Statements Information contained in this supplemental presentation that is not historical by nature constitutes forward-looking statements which can be identified by the use of forward-looking terminology such as believes, expects, plans, intends, estimates, projects, could, may, will, should, or anticipates or the negatives thereof, other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that future results expressed or implied by the forward-looking statements will be achieved and actual results may differ materially from those contemplated by the forward-looking statements. Such statements are based on management s current expectations and beliefs and are subject to a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements. These risks and uncertainties include, but are not limited to, those relating to Zayo Group Holdings, Inc. s ( the Company or ZGH ) financial and operating prospects, current economic trends, future opportunities, ability to retain existing customers and attract new ones, outlook of customers, and strength of competition and pricing. In addition, there is risk and uncertainty in the Company s acquisition strategy including our ability to integrate acquired companies and assets. Specifically there is a risk associated with our recent acquisitions, and the benefits thereof, including financial and operating results and synergy benefits that may be realized from these acquisitions and the timeframe for realizing these benefits. Other factors and risks that may affect our business and future financial results are detailed in the Risk Factors section of our Annual Report on From 0-K filed with the Securities and Exchange Commission on September 8, 205. We caution you not to place undue reliance on these forward-looking statements, which speak only as of their respective dates. We undertake no obligation to publicly update or revise forward-looking statements to reflect events or circumstances after releasing this supplemental information or to reflect the occurrence of unanticipated events, except as required by law. Presentation of Certain Consolidated Pro-forma Financial Data Acquisitions have been, and are expected to continue to be, a component of the Company s strategy. In this Supplemental Earnings Information under Foreign Exchange Impact & Exposure, the Company sets forth its pro-forma annualized revenue growth rate and pro-forma annualized Adjusted EBITDA growth rates for the current fiscal quarter. These pro-forma measures are intended to provide additional information regarding such rates of growth on a more comparable basis than would be provided without such pro-forma adjustments. Non-GAAP Financial Measures The Company provides financial measures that are not defined under generally accepted accounting principles in the United States, or GAAP, including Adjusted EBITDA, Adjusted EBITDA Margin, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, adjusted funds from operations, and net adjusted funds from operations. Adjusted EBITDA is defined as earnings/(loss) from continuing operations before interest, income taxes, depreciation, and amortization ( EBITDA ) adjusted to exclude acquisition or disposal-related transaction costs, losses on extinguishment of debt, stock-based compensation, unrealized foreign currency gains/ (losses) on intercompany loans, and non-cash income/(loss) on equity and cost method investments. Adjusted EBITDA Margin is defined as Adjusted EBITDA divided by revenue. Unlevered free cash flow is defined as Adjusted EBITDA minus purchases of property and equipment, net of stimulus grants. Adjusted unlevered free cash flow is defined as Adjusted EBITDA minus purchases of property and equipment, net of stimulus grants, plus additions to deferred revenue, less noncash monthly amortized revenue. Levered free cash flow is defined as operating cash flow minus purchases of property and equipment, net of stimulus grants. Adjusted funds from operations ( AFFO ) is defined as earnings/(loss) from continuing operations before depreciation and amortization, unrealized foreign currency gains/(losses) on intercompany loans, stock-based compensation, acquisition or disposal-related transaction costs, losses on extinguishment of debt, non-cash income/(loss) on equity and cost investments, non-cash monthly amortized revenue, less cash payments related to maintenance capital expenditures. Net AFFO is defined as AFFO plus upfront customer payments from less than twelve month payback on net new sales less cash payments related to capital expenditures for (i) less than twelve month payback on net new sales and (ii) network capacity. These measures are not measurements of our financial performance under GAAP and should not be considered in isolation or as alternatives to net income, net cash flows provided by operating activities, total net cash flows or any other performance measures derived in accordance with GAAP or as alternatives to net cash flows from operating activities or total net cash flows as measures of our liquidity. We use Adjusted EBITDA to evaluate our operating performance and liquidity, and we use levered free cash flow as a measure to evaluate cash generated through normal operating activities. In addition to Adjusted EBITDA, management uses unlevered free cash flow, which measures the ability of Adjusted EBITDA to cover capital expenditures. Adjusted EBITDA is a performance rather than cash flow measure. Correlating our capital expenditures to our Adjusted EBITDA does not imply that we will be able to fund such capital expenditures solely with cash from operations. These metrics are among the primary measures used by management for planning and forecasting future periods. We believe the presentation of Adjusted EBITDA is relevant and useful for investors because it allows investors to view results in a manner similar to the method used by management and make it easier to compare our results with the results of other companies that have different financing and capital structures. We believe that the presentation of levered free cash flow is relevant and useful to investors because it provides a measure of cash available to pay the principal on our debt and pursue acquisitions of businesses or other strategic investments or uses of capital. We believe the presentation of AFFO and Net AFFO is useful to investors by providing measures presented by certain datacenter and cellular tower REITs (and some non-reits) with which we are sometimes compared. 2

3 Non-GAAP Financial Measures (continued) We also monitor Adjusted EBITDA because our subsidiaries have debt covenants that restrict their borrowing capacity that are based on a leverage ratio, which utilizes a modified EBITDA, as defined in our credit agreement and the indentures governing our notes. The modified EBITDA is consistent with our definition of Adjusted EBITDA; however, it includes the pro forma Adjusted EBITDA of and expected cost synergies from the companies acquired by us during the quarter for which the debt compliance certification is due. Adjusted EBITDA results, along with the quantitative and qualitative information, are also utilized by management and our Compensation Committee, as an input for determining incentive payments to employees. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results of operations and operating cash flows as reported under GAAP. For example, Adjusted EBITDA: does not reflect capital expenditures, or future requirements for capital and major maintenance expenditures or contractual commitments; does not reflect changes in, or cash requirements for, our working capital needs; does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and does not reflect cash required to pay income taxes. Unlevered free cash flow and adjusted unlevered free cash flow have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, unlevered free cash flow: does not reflect changes in, or cash requirements for, our working capital needs; does not reflect the interest expense, or the cash requirements necessary to service the interest payments, on our debt; and does not reflect cash required to pay income taxes. Levered free cash flow, AFFO, and Net AFFO have limitations as an analytical tool and should not be considered in isolation from, or as a substitute for, analysis of our results as reported under GAAP. For example, levered free cash flow, AFFO, and Net AFFO: does not reflect principal payments on debt; does not reflect principal payments on capital lease obligations; does not reflect dividend payments, if any; and does not reflect the cost of acquisitions. Our computation of Adjusted EBITDA, unlevered free cash flow, adjusted unlevered free cash flow, levered free cash flow, AFFO, and Net AFFO may not be comparable to other similarly titled measures computed by other companies because all companies do not calculate these measures in the same fashion. Because we have acquired numerous entities since our inception and incurred transaction costs in connection with each acquisition, borrowed money in order to finance our operations and acquisitions, and used capital and intangible assets in our business, and because the payment of income taxes is necessary if we generate taxable income after the utilization of our net operating loss carryforwards, any measure that excludes these items has material limitations. As a result of these limitations, these measures should not be considered as a measure of discretionary cash available to us to invest in the growth of our business or as a measure of our liquidity. See Historical Financial data & Reconciliation for a quantitative reconciliation of Adjusted EBITDA, AFFO, and Net AFFO to net income/(loss) and for a quantitative reconciliation of unlevered free cash flow, adjusted unlevered free cash flow and levered free cash flow to net cash flows provided by operating activities. Annualized revenue and annualized Adjusted EBITDA are derived by multiplying the total revenue and Adjusted EBITDA, respectively, for the most recent quarterly period by four. Our computations of annualized revenue and annualized Adjusted EBITDA may not be representative of our actual annual results. Measures referred to as being calculated on a constant currency basis are intended to present the relevant information assuming a constant exchange rate between the two periods being compared. Such metrics are calculated by applying the currency exchange rates used in the preparation of the prior period financial results to the subsequent period results. Tables reconciling such non-gaap measures are included in the Historical Financial Data & Reconciliations section of this presentation. A glossary of terms used throughout is available under the investor section of the Company s website at 3

4 Financial and Operational Highlights 4

5 Segment Financial Data Rollup Segment Data Rollup ($ in ) Three Months Ended March 3, 206 Dark Fiber Network Colocation Solutions Dark Fiber Zayo Zayo Zayo Connectivity Network Zayo & Cloud Colocation Zayo Zayo Mobile Zayo Dark Segment Solutions Wavelength Zayo SONET Ethernet IP Segment Connectivity Cloud Segment & Cloud Professional Other Zayo Canada Zayo Group Infrastructure Fiber Elimination Segment Services Services Services Services Elimination Segment zcolo Services Elimination Segment Services Other Segment Segment Holdings Revenue $29. $5.2.0 $44.3 $74.4 $2.9 $43. $33..0 $72.5 $50.8 $9.5.0 $60.3 $4.5.3 $4.8 $96. $478.0 Adjusted EBITDA $20.4 $83.5 $03.9 $35. $.9 $23.8 $8.4 $89.2 $25.5 $4.7 $30.2 $.3.0 $.3 $8.2 $242.8 Adjusted EBITDA margin 70% 72% 72% 47% 54% 55% 55% 52% 50% 49% 50% 28% 3% 26% 9% 5% 5

6 Foreign Exchange Impact & Exposure Foreign Exchange Impact & Exposure ($ in ) FOREIGN EXCHANGE IMPACT Without Zayo Canada With Zayo Canada Revenue Three Months Ended March 3,206 Pro-forma Annualized Revenue Growth 5% 2% Variance $.8 $4.2 Pro-forma annualized constant currency revenue growth 2 7% 5% Adjusted EBITDA, from continuing operations: Pro-forma Annualized Adjusted EBITDA Growth 8% 3% Variance.6.6 Pro-forma annualized constant currency adjusted EBITDA growth 2 9% 5% FOREIGN EXCHANGE EXPOSURE Percentage of Revenue British Pound ( ) 8% 7% Euro ( ) 4% 3% Canadian Dollar (CAD) 3 20% Total non-us Dollar 2% 30% Pro-forma Acquisition Adjusted growth rates reflective of Stream, Viatel and Allstream acquisitions 2 Constant currency is based on the average US Dollar to British Pound, Euro and Canadian Dollar foreign exchange rates for the base comparative periods 3 Canadian Dollar would have represented 23% of our revenue assuming a full quarter of Zayo Canada 6

7 Stratification of Revenue $500 Revenue Stratification $400 MRR and MAR on the Last Day of the Quarter $400 $300 $296.8 $9.8 $5.2 $4. $320.6 $323.9 $340.7 $36.9 $366.8 $369.6 $38.9 $4.5 $9.4 $8.0 $5.0 $9.2 $20.4 $2.5 $23.8 $3.6 $9.6 $9.5 $6.2 $6. $6.7 $6.5 $7.3 $7.3 $8.3 $4.4 $5. $5.4 $350 $300 $250 $200 $200 $00 $267.6 $289.4 $292.0 $303.4 $327. $332.3 $336.4 $347.0 $50 $00 $50 $98.8 $03.7 $04.8 $5.0 $7.4 $9.8 $23.5 $25.8 MRR Usage MAR Other Revenue $60 Other Revenue $60 MAR $60 IRU and Upfront Charges $50 $50 $50 $40 $40 $40 $30 $20 $30 $20 $30 $20 $48.0 $43.2 $40.6 $52.6 $0 $9.8 $9.6 $9.5 $3.6 $9.4 $8.0 $5.0 $4.5 $0 $5.2 $7.3 $7.3 $8.3 $9.2 $20.4 $2.5 $23.8 $0 $34. $34.2 $28.8 $27.5 The change in MRR and MAR on the last day of the quarter is equal to the net installations in the period plus or minus any effects of fluctuations in foreign exchange rates 7

8 Capital Expenditures Capital Expenditures Purchases of Property and Equipment Purchases of Property and Equipment $200 $50 $00 $50 Purchases of Property and Equipment by Driver $ $5.3 $4.4 $29.5 $30. $3.7 $4.4 $55.5 $5.0 $59.2 $2.7 $72.4 $74.0 $3. $.2 $200 $50 $00 $50 Purchases of Property and Equipment by Type $05.8 $9.2 $24.6 $36. $9.9 $9.9 $83.6 $73. $88.8 $05.2 $20. $9.9 $43.0 $49.6 $62.8 $66.5 $39.8 $8.4 $20.8 $29. $30.0 $32.2 $35.5 $3.5 Growth Maintenance Other Optronics & IP Fiber & Colo Other 8

9 Major Network Expansions Update Major Network Expansion Projects drove 32% of Capex but 2% of Gross Installs in Mar-6 quarter Major Network Expansions Update (in ) Major Network Expansion Projects Capex vs. Gross Installs (MRR & MAR) (in ) Cumulative Capital Expenditures vs. Cumulative Gross Installs (MRR & MAR) Revenue (MRR & MAR) Gross Installs Revenue (MRR & MAR) Gross Installs Capital Expenditures Capital Expenditures 9

10 Net AFFO AFFO % of Revenue $50 30% 32% 36% 39% 35% 36% 35% 34% $8 $7 Plus: <2 month payback net sales Less: Churn processed ($3.6) ($3.9) ($3.7) ($4.2) ($4.0) ($3.8) ($4.2) ($3.7) ($) $00 $6 $5 ($2) ($3) $4 ($4) $50 $3 $2 ($5) ($6) $88 $04 $8 $32 $26 $3 $29 $29 $ $4. $4.0 $3.8 $5. $4.5 $4.4 $4.3 $4.9 ($7) ($8) Implied Annualized Revenue Growth 2.3% 0.3% 0.2% 3.9%.6% 2.3% 0.4% 4.2% $50 Less: CapEx from <2 mo. payback net sales and Network Capacity CapEx $50 Plus: Upfront customer payments on <2 mo. payback net sales $50 % of Revenue Net AFFO 24% 20% 26% 32% 32% 35% 27% 8% $00 $93 $00 $00 $50 $63 $66 $24 $2 $5 $43 $47 $60 $23 $7 $72 $42 $34 $50 $50 $34 $2 $5 $38 $39 $37 $26 $45 $8 $30 CapEx from <2mo. payback net sales Network Capacity $45 $25 $9 $68 $37 $55 $4 $0 $70 $63 $85 $08 $6 $27 $98 $67 Implied revenue growth calculation based on the last day of prior quarter MRR. Does not include amortized revenue 0

11 MRR and MAR MRR and MAR Installation and Churn Processed Installation and Churn Processed thousands $7,000 $6,000 $5,000 $4,000 $3,000 $2,000 Gross Installations $6,255 $5,90 $5,990 $5,268 $5,393 $5,478 $4,959 $4,85 $4,555 $4,400 $4,055 $4,23 $6,368 $5,07 $5,862 $4,638 thousands ($,000) ($2,000) ($3,000) ($4,000) ($5,000) ($2,363) ($2,468) ($60) ($2,885) ($82) ($344) ($437) ($30) ($365) ($563) ($90) ($594) Churn Processed ($2,62) ($2,829) ($2,900) ($2,79) ($3,40) ($62) ($56) ($67) ($605) ($69) ($43) ($46) ($6) ($625) ($375) ($396) ($564) ($40) ($33) ($272) ($3,594) ($3,75) ($3,904) ($4,59) ($4,032) ($3,75) ($3,723) ($4,70) $,000 ($6,000) ($7,000) Churn % = -.3% -.3% -.2% -.3% -.2% -.% -.2% -.0% New Services Upgrades Price Increases Replacement Services Hard Disconnects Upgrades Negative Price Changes Replacement Services

12 MRR Contract Value MRR MRR MRR Price Changes and Renewals thousands $4,000 $2,000 $0,000 $8,000 Price Increases $4,000 $0,000 Price increases as % of MRR = Price decreases as % of MRR = 6% 2% 8% 4% 2% % 7% 8% $2,000 $8,000-5% -9% -9% -6% -8% -7% -24% -33% $664 $73 $599 thousands $0,000 $8,000 Renewals (Where there is no price change) thousands $6,000 $4,000 Price Decreases $6,000 $4,000 $2,000 $639 $62 $527 $530 $406 Price Increases MRR before Price Increases $6,000 $4,000 $2,000 $2,446 $,977 $2,786 $2,538 $3,340 $2,767 $4,05 $3,684 $2,000 ($2,000) ($4,000) ($60) ($344) ($563) ($62) ($605) ($56) ($625) ($67) Price Decreases MRR before Price Decreases thousands $0,000 Price Changes Net of Price Increases and Price Decreases $200 Net Contract Value Associated with Price Changes and Renewals $8,000 $60 $6,000 $4,000 $20 $2,000 ($2,000) ($4,000) $62 $0 $34 $0 $88 ($80) ($9) ($72) $80 $40 $66.7 $64.8 $54.2 $53. $6.7 $55.5 $4.3 $24.5 Net Contract Value associated with Price Decreases Net Contract Value associated with Renewals Net Contract Value associated with Price Increases 2

13 MRR and MAR Contract Value MRR and MAR MRR and MAR Upgrades Upgrades Gross Installations Associated with Upgrades thousands $600 $500 Contract Value = $22.7M $7.5M $2.M $9.8M $6.9M $7.2M $30.8M $20.0M Churn Processed Associated with Upgrades thousands ($70) ($75) ($78) ($43) ($65) ($3) ($23) ($224) ($00) $400 ($200) $300 ($300) $200 ($400) $00 $253 $26 $25 $328 $35 $225 $249 $38 ($500) ($600) Contract Value = -$2.2M -$2.9M -.9M -.8M -$.2M -$2.8M -$.M -$5.M thousands $600 Net Installations Associated with Upgrades $30 Net Contract Value Associated with Upgrades $500 $25 $400 $20 $300 $5 $200 $0 $00 $84 $86 $37 $86 $286 $94 $27 $94 $5 $20.4 $4.7 $.2 $8.9 $5.7 $4.4 $29.6 $4.9 Churn Processed Associated with Upgrades may occur in a different fiscal quarter than the Gross Installations Associated with Upgrades. On this slide, the timing of Churn Processed Associated with Upgrades is reported in the same quarter as the corresponding Gross Installation Associated with Upgrades, rather than being reported in the period in which the Churn was processed 3

14 MRR and MAR Contract Value MRR and MAR MRR and MAR Replacement Services Replacement Services Gross Installations Associated with Replacement Services thousands Contract Value = $600 $7.3M $2.2M $.6M $8.6M $.4M $4.2M $.M $9.4M $500 Churn Processed Associated with Replacement Services thousands ($00) ($46) ($368) ($46) ($373) ($268) ($326) ($30) ($285) $400 $300 $200 ($200) ($300) ($400) $00 $429 $326 $476 $407 $306 $387 $335 $306 Net Installations Associated with Replacement Services $400 ($500) ($600) $6 Contract Value = $-5.M $-4.8M $-6.7M $-3.5M $-3.7M $-3.8M $-3.3M $-2.3M Net Contract Value Associated with Replacement Services $300 $200 $2 $00 ($00) ($200) $3 ($42) $60 $34 $39 $6 $25 $22 $2.3 $7.4 $4.9 $5. $7.7 $0.4 $7.8 $7. Churn Processed associated with Replacement Services may occur in a different fiscal quarter than the Gross Installations associated with Replacement Services. On this slide, the timing of Churn Processed associated with Replacement Services is reported in the same quarter as the corresponding Gross Installation associated with Replacement Services, rather than being reported in the period in which the Churn was processed $8 $4 4

15 MRR and MAR Service Activation and Revenue Under Contract Service Activation and Revenue Under Contract Service Activation Pipeline $20 Implied Avg days to Install = $6 $5.6 $3.2 $3.7 $4.0 $4.4 $2 $0.7 $.3 $.0 $8 $0,000 $8,000 $6,000 $4,000 Revenue Under Contract Avg Remaining Contract Term (months) = $6,500 $6,544 $5,824 $6,034 $6,64 $4,694 $5,079 $5,98 $4 $2,000 5

16 MRR and MAR Net New Sales (Bookings) Net New Sales (Bookings) Net New Sales (Bookings) thousands Contract Value = $0,000 $494M $545M $227M $563M $55M $404M $474M $392M $8,000 $7,035 $6,799 $6,973 $6,079 $6,372 $6,785 $5,796 $6,000 $5,28 $4,000 $2,000 $450 $350 $250 $50 $50 $(50) $(50) $(250) Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges Payback Period = $83 $69 $68 $222 $88 $64 $244 $84 Net Sales - MRR Net Sales - MAR Net New Sales (Bookings) - IRU and Upfront Charges Estimated Expenditures associated with Net New Sales (Bookings) Mar-6 Net Sales (Bookings) less NetEx percentage is 94%. Network expense or "NetEx", consists of third-party network service costs resulting from Net New Sales (Bookings) 6

17 Stratification of Net New Sales (Bookings) Net New Sales (Bookings) Stratification June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, Network capacity Estimated Capital Expenditures ($ in ) $23.8 $20.6 $33.7 $42.7 $2.5 $22.8 $4.6 $34.2 4% 2. <2 Month Payback and Positive IRR Three Months Ended Net New Sales (Bookings) (MRR and MAR) ($ in thousands) $4,03 $3,965 $3,757 $5,29 $4,478 $4,399 $4,283 $4,923 69% Average % of eight prior quarters Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) ($5.6) $20. ($.0) ($7.6) ($.) ($8.4) ($.3) $27.6 Estimated Capital Expenditures ($ in ) $39.5 $45.4 $7.8 $50.6 $25.9 $36.8 $29.8 $37.6 7% Estimated Payback Period (in months) Contract Value of Net New Sales (Bookings) ($ in ) $277.7 $353.6 $5.9 $358.8 $209.3 $264.9 $229.4 $ >2 Month Payback and Positive IRR Net New Sales (Bookings) (MRR and MAR) ($ in thousands) $,99 $,386 $,404 $,47 $2,036 $,708 $,63 $,639 25% Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) $52.7 $28.9 $23.7 $20.9 $59.4 $42.3 $48.2 $43.2 Estimated Capital Expenditures ($ in ) $67.7 $56.9 $29.5 $25.0 $84.9 $5.4 $60.8 $6.7 32% Estimated Payback Period (in months) Contract Value of Net New Sales (Bookings) ($ in ) $25.0 $30.4 $73. $56. $270.5 $2.6 $07.2 $ Speculative Projects Net New Sales (Bookings) (MRR and MAR) ($ in thousands) $57 $446 $58 $760 $285 $266 $889 $42 6% Estimated Capital and Upfront Expenditures associated with Net New Sales (Bookings) less Upfront Charges ($ in ) $3. $99.0 $.3 $75.9 $8.3 $7.7 $65.3 $78.5 Estimated Capital Expenditures ($ in ) $3.2 $99.6 $.3 $98.9 $8.2 $20. $79. $ % Estimated Payback Period (in months) n/a n/a n/a n/a n/a n/a n/a n/a Contract Value of Net New Sales (Bookings) ($ in ) $.4 $60.7 $2.0 $48.7 $35.0 $7.9 $37.3 $55.8 7

18 Customer Concentration and Verticals Customer Concentration and Verticals Customer Concentration June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, % of Total Customers Top 5 Customers 22% 2% 22% 2% 20% 9% 20% 20% Top 20 Customers 37% 36% 36% 35% 33% 33% 33% 33% Total # of Customers 4,85 5,703 5,744 6,577 6,60 6,693 6,7 6,749 Zayo Group Customer Verticals June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, % of MRR & MAR Wireline 34% 33% 34% 3% 32% 3% 32% 32% Content 6% 7% 6% 7% 8% 8% 8% 7% Wireless 8% 7% 7% 5% 4% 4% 5% 5% Finance 2% % % 0% % % 0% 0% Public Sector/Healthcare 8% 7% 7% 8% 8% 9% 8% 9% Services 5% 6% 6% 8% 7% 7% 7% 8% Cloud/Data Center 5% 6% 6% 7% 7% 7% 7% 7% Manufacturing/Transportation 3% 3% 3% 3% 3% 3% 3% 3% Customer Verticals excludes the Other segment and Zayo Canada 8

19 Product Mix Product Mix Zayo Group Product Mix June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, % of MRR & MAR Dark Fiber Solutions Metro Dark Fiber 28% 29% 28% 26% 27% 27% 27% 28% Mobile Infrastructure 7% 7% 7% 7% 7% 7% 7% 7% Long Haul Dark Fiber 3% 4% 3% 3% 3% 3% 3% 3% Sub-Total 39% 39% 39% 36% 37% 37% 38% 38% Zayo Network Connectivity Wavelengths 22% 22% 22% 20% 20% 20% 20% 20% Ethernet 3% 3% 3% 2% % % 2% % Internet Protocol 9% 9% 9% 9% 9% 0% 0% 0% SONET 9% 9% 8% 7% 7% 6% 6% 5% Sub-Total 53% 52% 52% 48% 47% 48% 47% 47% Zayo Colo and Cloud Infrastructure Colocation 8% 8% 9% 3% 3% 3% 2% 2% Cloud 2% 3% 3% 3% 3% Sub-Total 8% 8% 9% 6% 6% 5% 5% 5% Product Mix excludes the Other segment and Zayo Canada 9

20 Headcount Towers & Small Cells % of FTT MRR and MAR Mobile Infrastructure (FTT & Small Cell) Fiber to the Tower & Small Cell 2,000 0,000 8,000 6,000 4,000 2,000 5,972 6, 5, ,354,200, Total FTT Towers & Small Cells 7,40 358, ,389 8, ,53 2,344 4,09 4,286 4,520 4,829 4,998 5,234 5,65 5, ,424 0,856,628,598 2,585 2, % 80% 60% 40% 20% FTT Product Mix 7% 7% 0% 4% 6% 6% 88% 88% 86% 83% 82% 82% 22% 24% 77% 75% 0 In Service - FTT In Service - SC Under Construction - FTT Under Construction - SC Employee Data Employee & QBHC Data Number of Employees 2,500 0% 5% 5% 4% 3% 2% 2% % % FTT Product Mix - % SONET/Digital Signal FTT Product Mix - % Dedicated Ethernet FTT Product Mix - % Dark Fiber 2,000,500,53,606, ,803,833, ,949, , # of Non-QBHC # of QBHC 20

21 Inorganic Activity 2

22 Weighted Average Multiple = 9.5x Pre-Synergy and 6.6x Post Synergy ZGH Acquisition History Estimated Estimated Adjusted Adjusted EBITDA LQA Close Date Purchase Price Pre-Synergy Multiple Planned Synergies (in unless noted) Revenue LQA EBITDA LQA + Synergies Post Synergy Multiple Memphis Networx Jul $5.4 $.2 7.7x 0.0 $.2 7.7x PPL Aug x x IFW Sep (.7) NM.0 (0.7) NM Onvoy Nov x x Voicepipe Nov-07 N/A N/A N/A N/A N/A N/A N/A Citynet Feb x x NTI May x x Ctel Tri-State Mkts Jul (.0) NM NM CFS Sep x x Citynet Retail Sep (0.3) NM 0.0 (0.3) NM Adesta Sep (0.2) NM 0.0 (0.2) NM NTI (California) May-09 N/A N/A N/A N/A N/A N/A N/A Fibernet Sep x x AGL Networks Jul x x Dolphini Sep (0.) NM 0. (0.) NM AFS Oct x x 360* Dec x x Marquisnet Dec x x Arialink May x x AboveNet Jul-2 2, x x Fibergate Aug x x USCarrier Oct x x First Telecom Services Dec x x LiteCast Dec x x Core NAP May x x Corelink Aug (.6) NM x Access Communications Oct x x Fiberlink Oct x x CoreXchange Mar x x 2 2 Geo May x x 3 3 Neo Telecoms Jul x x AtlantaNAP Jul x x IdeaTek Jan x x 4 Latisys Feb x x 5 Viatel Dec x x Stream Dallas Data Center Dec x x 6 6 Allstream Jan x x Sum/Weighted Avg $5,062.5 $,620.9 $ x $233.5 $ x Revenue and Adjusted EBITDA (adjusted for estimated purchase accounting adjustments) recognized by the acquired entity during the last quarterly period immediately preceding the respective acquisition date multiplied by 4 2 Geo reflects GBP-USD FX rate of Neo Telecoms reflects Euro-USD FX rate of Adjusted EBITDA reflects lease adjustment of.8m reflecting Dec-4 purchase of Denver facility 5 Viatel reflects Euro-USD FX rate of Allstream reflects CAD-USD FX rate of

23 Historical Financial Data & Reconciliations 23

24 Consolidated Historical Financial Data Consolidated Financial Data ($ in ) Fiscal Year 204 Fiscal Year 205 Fiscal Year 206 September 30, December 3, March 3, June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, Total Total Revenue $268. $277.0 $28.4 $296.7 $,23.2 $320.6 $323.9 $340.7 $36.9 $,347. $366.8 $369.6 $478.0 Annualized revenue growth 0% 3% 6% 22% 32% 4% 2% 25% 5% 3% 7% Operating income/(loss) $3.0 $22.6 $5.8 ($3.3) $56. ($39.5) $97. $56.7 $54.7 $69.0 $52. $58.7 $57.5 Loss from continuing operations ($29.) ($37.6) ($42.7) ($72.2) ($8.6) ($0.5) $3.8 ($53.7) $5. ($55.3) ($5.2) ($0.8) ($9.3) Earnings from discontinued operations, net of income taxes $.7.8 $. ($.3) $ Net (loss)/income ($27.4) ($36.8) ($4.6) ($73.5) ($79.3) ($0.5) $3.8 ($53.7) $5. ($55.3) ($5.2) ($0.8) ($9.3) Adjusted EBITDA, from continuing operations $653.6 $83.0 $89.7 $99.0 $20.9 $782.6 $25.4 $28.9 $242.8 Purchases of property and equipment $ Unlevered Free Cash Flow (Deficit) $68.9 $73.4 $74.3 $76.2 $292.8 $67.7 $60.2 $68.9 $55.4 $252.2 $56.2 $46.5 $57.7 Annualized EBITDA growth 39% 5% 9% 4% 28% 5% 20% 24% 9% 7% 44% Adjusted EBITDA margin 58% 58% 59% 58% 57% 59% 58% 58% 59% 59% 5% 24

25 Consolidated Historical Financial Data Without Zayo Canada Consolidated Financial Data ($ in ) Consolidated March 3, 206 Zayo Canada Consolidated Excluding Zayo Canada Revenue $478.0 $96. $38.9 Annualized revenue growth 7% 3% Operating income/(loss) $57.5 ($5.7) $63.2 Loss from continuing operations ($9.3) ($5.6) ($3.7) Earnings from discontinued operations, net of income taxes Net (loss)/income ($9.3) ($5.6) ($3.7) Adjusted EBITDA, from continuing operations $242.8 $8.2 $224.6 Purchases of property and equipment Unlevered Free Cash Flow (Deficit) $57.7 $7. $50.6 Annualized EBITDA growth 44% 0% Adjusted EBITDA margin 5% 59% 25

26 Consolidated Historical Reconciliations Consolidated Financial Data ($ in ) Fiscal Year 204 Fiscal Year 205 Fiscal Year 206 September 30, December 3, March 3, June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, Total Total Net (loss)/income ($27.4) ($36.8) ($4.6) ($73.5) ($79.3) ($0.5) $3.8 ($53.7) $5. ($55.3) ($5.2) ($0.8) ($9.3) Earnings/(loss) from discontinued operations (.7) (0.8) (.).3 (2.3) Interest expense Provision/(benefit) for income taxes (4.4) (8.4) 4.6 (8.8) Depreciation and amortization Transaction costs Stock-based compensation (6.0) Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.) (3.8) (4.7) (6.8) Non-cash loss on investments Adjusted EBITDA, from continuing operations $55.6 $6.7 $65.2 $7. $653.6 $83.0 $89.7 $99.0 $20.9 $782.6 $25.4 $28.9 $242.8 Purchases of property and equipment Unlevered Free Cash Flow $68.9 $73.4 $74.3 $76.2 $292.8 $67.7 $60.2 $68.9 $55.4 $252.2 $56.2 $46.5 $

27 Consolidated Historical Reconciliations Without Zayo Canada Consolidated Financial Data ($ in ) Consolidated March 3, 206 Zayo Canada Consolidated Excluding Zayo Canada Net (loss)/income ($9.3) ($5.6) ($3.7) Earnings/(loss) from discontinued operations Interest expense Provision/(benefit) for income taxes Depreciation and amortization Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency loss/(gain) on intercompany loans Non-cash loss on investments Adjusted EBITDA, from continuing operations $242.8 $8.2 $224.6 Purchases of property and equipment Unlevered Free Cash Flow $57.7 $7. $

28 Segment Data Reconciliation: Net (Loss)/Earnings to Adjusted EBITDA Segment Data Reconciliation ($ in ) Three Months Ended March 3, 206 Zayo Dark Fiber Solutions Zayo Network Connectivity Zayo Cloud and Connectivity Services Zayo Canada Zayo Other Corporate / Intercompany Elimination Zayo Group Holdings Net earnings/(loss) (3.0) (5.6) 0.7 ($23.5) ($9.3) Interest expense Benefit for income taxes Depreciation and amortization expense Transaction costs Stock-based compensation Loss on extinguishment of debt Foreign currency gain on intercompany loans 0.0 (0.3) Non-cash loss on investments (0.) Adjusted EBITDA $03.9 $89.2 $30.2 $8.2 $.3.0 $242.8 A reconciliation of previous quarters legacy segment information can be found in our historical earnings supplements found on our website at 28

29 Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF Consolidated Financial Data ($ in ) Fiscal Year 204 September 30, December 3, March 3, June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, Fiscal Year 205 Fiscal Year Net cash provided by continuing operating activities: $97. $42.3 $59.0 $68. $8.2 $23.7 $68.5 $95.0 $95.2 $46.2 $96.4 Cash paid for income taxes Cash paid for interest, net of capitalized interest Non-liquidating distribution to common unit holders Excess tax benefit from stock-based compensation Transaction costs Provision for bad debts (0.4) (0.4) (0.8) (0.3) (0.6) (0.3) (0.4) (0.6) (0.6) (.9) (0.6) Additions to deferred revenue (24.0) (23.4) (65.2) (5.2) (43.2) (40.9) (39.5) (25.5) (49.7) (36.9) (58.8) Amortization of deferred revenue Other changes in operating assets and liabilities (5.8) 2.0 (5.0) Adjusted EBITDA Purchases of property and equipment (86.7) (88.3) (90.9) (94.9) (5.3) (29.5) (30.) (55.5) (59.2) (72.4) (85.) Unlevered Free Cash Flow Additions to deferred revenue Amortization of deferred revenue (2.6) (3.6) (4.2) (5.2) (7.3) (7.3) (8.3) (9.2) (20.4) (2.5) (24.7) Adjusted Unlevered Free Cash Flow $80.3 $83.2 $25.8 $2.2 $93.7 $83.8 $90. $6.7 $85.5 $6.9 $9.8 Reconciliation of levered free cash flow: Net cash provided by continuing operating activities: $97. $42.3 $59.0 $68. $8.2 $23.7 $68.5 $95.0 $95.2 $46.2 $96.4 Purchases of property and equipment ($86.7) ($88.3) ($90.9) ($94.9) ($5.3) ($29.5) ($30.) ($55.5) ($59.2) ($72.4) ($85.) Levered free cash flow: $0.4 $54.0 $68. $73.2 $2.9 ($5.8) $38.4 $39.5 $36.0 ($26.2) $.3 Amortization of deferred revenue is equal to monthly amortized revenue (MAR) 29

30 Cash from Operating Activities to UFCF, Adjusted UFCF & LFCF Without Zayo Canada Consolidated Financial Data ($ in ) Consolidated March 3, 206 Zayo Canada Consolidated Excluding Zayo Canada Net cash provided by continuing operating activities: $96.4 $4. $92.3 Cash paid for income taxes Cash paid for interest, net of capitalized interest Non-liquidating distribution to common unit holders Excess tax benefit from stock-based compensation Transaction costs Provision for bad debts (0.6) 0. (0.7) Additions to deferred revenue (58.8) (.5) (57.3) Amortization of deferred revenue Other changes in operating assets and liabilities Adjusted EBITDA Purchases of property and equipment (85.) (.) (74.0) Unlevered Free Cash Flow Additions to deferred revenue Amortization of deferred revenue (24.7) (0.9) (23.8) Adjusted Unlevered Free Cash Flow $9.8 $7.7 $84. Reconciliation of levered free cash flow: Net cash provided by continuing operating activities: $96.4 $4. $92.3 Purchases of property and equipment ($85.) ($.) ($74.0) Levered free cash flow: $.3 ($7.0) $8.3 Amortization of deferred revenue is equal to monthly amortized revenue (MAR) 30

31 AFFO & Net AFFO Reconciliation AFFO & Net AFFO Reconciliation ($ in ) Fiscal Year Fiscal Year Fiscal Year September 30, December 3, March 3, June 30, September 30, December 3, March 3, June 30, September 30, December 3, March 3, Total Total Earnings/(loss) from continuing operations ($29.) ($37.6) ($42.7) ($72.2) ($8.6) ($0.5) $3.8 ($53.7) $5. ($55.3) ($5.2) ($0.8) ($9.3) Depreciation and Amortization Expense Foreign currency loss/(gain) on intercompany loans (0.6) (0.2) (0.) (3.8) (4.7) (6.8) Stock-based compensation (6.0) Transaction costs Loss on extinguishment of debt Non-cash loss on investments Amortization of deferred revenue (2.6) (3.6) (4.2) (5.2) (55.6) (7.3) (7.3) (8.3) (9.2) (72.) (20.4) (2.5) (24.7) Maintenance capital expenditures (5.) (4.9) (4.9) (5.2) (20.) (5.7) (5.7) (5.8) (7.5) (24.7) (7.0) (6.5) (8.2) AFFO Upfront customer payments on <2 mo payback of new sales Capital expenditures for <2 mo payback net new sales (24.4) (44.) (4.5) (39.4) (22.7) (45.4) (7.8) (50.6) (25.9) (39.7) (36.8) (29.8) (46.4) Capital expenditures for network capacity (5.7) (7.4) (20.0) (23.8) (76.9) (20.6) (33.7) (42.7) (2.5) (8.5) (22.8) (4.6) (34.5) Net AFFO $69.9 $7.2 $85.7 $69.8 $296.2 $63.0 $85.0 $07.5 $6.2 $37.7 $27.0 $98.3 $74.2 3

32 AFFO & Net AFFO Reconciliation Without Zayo Canada AFFO & Net AFFO Reconciliation March 3, 206 ($ in ) Consolidated Zayo Canada Consolidated Excluding Zayo Canada March 3, March 3, Total Earnings/(loss) from continuing operations ($9.3) ($5.6) ($3.7) Depreciation and Amortization Expense $24.2 Foreign currency loss/(gain) on intercompany loans. 0.0 $. Stock-based compensation $33.4 Transaction costs $3.6 Loss on extinguishment of debt Non-cash loss on investments Amortization of deferred revenue (24.7) (0.9) ($23.8) Maintenance capital expenditures (8.2) (.9) (6.3) AFFO $29. Upfront customer payments on <2 mo payback of new sales $0.0 Capital expenditures for <2 mo payback net new sales (46.4) (8.8) ($37.6) Capital expenditures for network capacity (34.5) (0.4) ($34.) Net AFFO $74.2 $6.8 $

33 Pro-forma Growth Reconciliations March 206 (Supporting FY6Q3 Pro-forma Growth excluding Zayo Canada) Pro-forma Growth Reconciliation, 2 Three Months ended March 3, 206 Historical Zayo Allstream Pro-forma without Allstream (in ) Revenue $ $ 96. $ 38.9 Operating costs and expenses Operating costs, excluding depreciation and amortization Selling, general and administrative expenses Depreciation and amortization Operating income 57.5 (5.7) 63.2 Other income/(expense) Interest expense (57.7) (0.) (57.6) Loss on extinguishment of debt Foreign currency loss on intercompany loans (.) - (.) Other (expense)/income, net (0.2) 0.2 (0.4) Total other expense, net (69.0) 0. (69.) Loss from continuing operations before provision for income taxes (.5) (5.6) (5.9) Provisionfor income taxes Net loss $ (9.3) $ (5.6) $ (3.7) Add back non-ebitda items included in net loss Depreciation and amortization Interest expense Provision for income taxes Unrealized loss/(gain) on intercompany loans. -. Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA, from continuing operations $ $ 8.2 $ A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes historical financial results and related adjustments for acquisitions completed prior to March 3,

34 Pro-forma Growth Reconciliations March 206 (Supporting FY6Q3 Pro-forma Growth including Zayo Canada) Pro-forma Growth Reconciliation, 2 Zayo Three Months ended March 3, 206 Historical Allstream Allstream adjustments Pro-Forma with Allstream (in ) Revenue $ $ 5.7 $ (0.2) $ Operating costs and expenses Operating costs, excluding depreciation and amortization (0.) 78.3 Selling, general and administrative expenses Depreciation and amortization Operating income 57.5 (0.9) (0.2) 56.4 Other income/(expense) Interest expense (57.7) - (3.8) (6.5) Loss on extinguishment of debt Foreign currency loss on intercompany loans (.) 0. - Other (expense)/income, net (0.2) - - (0.2) Total other expense, net (69.0) 0. (3.8) (72.7) Loss from continuing operations before provision for income taxes (.5) (0.8) (4.0) (6.3) Provision/(benefit) for income taxes 7.8 (0.) (.8) 5.9 Net Loss $ (9.3) $ (0.7) $ (2.2) $ (22.2) Add back non-ebitda items included in net loss Depreciation and amortization Interest expense Provision/(benefit) for income taxes 7.8 (0.) (.8) 5.9 Unrealized loss/(gain) on intercompany loans. (0.) -.0 Transaction costs Stock-based compensation Non-cash loss on investments Adjusted EBITDA, from continuing operations $ $ 2.9 $ (0.) $ A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes historical financial results and related adjustments for acquisitions completed prior to March 3,

35 Pro-forma Growth Reconciliations December 205 (Supporting FY6Q3 Pro-forma Growth) Pro-forma Growth Reconciliation, 2 Historical Three Months ended December 3, 205 Zayo Viatel Allstream Stream Data Center Adjustments (excluding Allstream) Adjustments (Allstream) Pro-Forma with Allstream Pro-Forma without Allstream (in ) Revenue $ $ 5.9 $ 5.5 $ 0.5 $.4 $ (.2) $ 49.7 $ Operating costs and expenses Operating costs (0.80) Selling, general and administrative expenses Depreciation and amortization $ Operating income $ 58.7 $ (0.6) $ 3.7 $ (0.) $ - $ (.0) $ 60.7 $ 58.0 Other income/(expense) Interest expense (5.2) (0.7) - - (3.9) - (55.8) (55.8) Loss on extinguishment of debt Foreign currency loss on intercompany loans Other expense, net (7.2) (7.2) (7.2) Total other expense, net $ (58.4) $ (0.7) $ - $ - $ (3.9) $ - $ (63.0) $ (63.0) Earnings/(loss) from continuing operations before provision for income taxes 0.3 (.3) 3.7 (0.) (3.9) (.0) (2.3) (5.0) Provision for income taxes Net (loss)/income $ (0.8) $ (.3) $ 3.7 $ (0.) $ (3.9) $ (.0) $ (3.4) $ (6.) Add back non-ebitda items included in net (loss)/income Depreciation and amortization Interest expense Provision for income taxes Unrealized loss/(gain) on intercompany loans 7. - (0.5) Transaction costs 3.3 (0.3) Stock-based compensation Non-cash loss on investments Adjusted EBITDA, from continuing operations $ 28.9 $.0 $ 8.8 $ 0.2 $ - $ (.0) $ $ 220. A reconciliation of previous quarter pro-forma growth can be found in our historical earnings supplements found on our website at 2 Includes historical financial results and related adjustments for acquisitions completed prior to March 3,