Gowex        Spain/ Telecommunications                                                                                    ...
GowexCONTENIDOSCapturing Wi-Fi growth .............................................................................. 3 Hig...
Gowex   Capturing Wi-Fi growth   Gowex accumulates +19% during the last 12 months (vs. Ibex 35’s -31%), in line with the  ...
Gowex                                  High double digit growth and improving mix.                                  In 201...
Gowex                       2)         Engineering, consultancy and maintenance (58% Wireless revenues in 2011). Gowex    ...
Gowex                          Gowex Telecom (30% revenues and 20% gross margin) is focused on B2B products and           ...
GowexGowex. Sales & Margins Performance (2008-14e)                     Gowex. Better PipelineSource: Gowex. Estimates: Ban...
Gowex                             Sector scenario: Wi-Fi, complementing wireless networks                             The ...
Gowex                                   Given the fundamental changes in the market, Cisco considers Wi-Fi will be a viabl...
Gowex                     Gowex. Positioning and strategy                     The context is therefore favourable for Gowe...
Gowex    Continue growing in Wi-Fi cities and associated networks. Continue growing in     international network deployme...
GowexGowex. Co-investment Formulae.                        Gowex. Example of Co-investmentSource: Gowex                   ...
Gowex                          Estimates adjusted                               We revise our estimates for 2012 onwards ...
GowexGowex. ND/EBITDA                                                                                     Gowex. Breakdown...
Gowex                   Our fair value discounts 2012e multiples of 4.9x EV/EBITDA and 10.8x P/E (3.9x and 9.3x           ...
Gowex                    Comparable transactions                    The Wi-Fi sector is a young, atomised sector in which,...
GowexRisk Factors1) Risk of not attaining sufficient critical mass that would convert the GOWEX Roaming   Platform into on...
Gowex Annex Company description and history Group Gowex operates in the telecommunication sector, holding a unique positio...
GowexGowex: Summary tablesPROFIT & LOSS (EURm)                               12/2008    12/2009    12/2010       12/2011  ...
Gowex         Gowex: Summary tables        GROWTH & MARGINS                                                         12/200...
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
GOWEX coverage analysis by BANKIA - July 2012
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GOWEX coverage analysis by BANKIA - July 2012

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About GOWEX (GOW-MAB, ALGOW-NYSE Alternext)
http://www.gowex.com/en/investors-shareholders/

GOWEX (GOW-MAB, ALGOW-NYSE Euronext) it’s been 13 years operating in the Telecommunication sector and it’s currently leading the creation of WiFi Cities offering Free & Premium WiFi connectivity in streets and transportation. The company is now exporting the innovative business models in many cities in Europe, Latin America, Asia and in emerging countries.

In 2010, it has become the first and only Spanish SMB to make a “dual listing”, publicly traded in the MAB (GOW) and the NYSE-Euronext (ALGOW). The company's total revenue in 2011 amounted to 66,7 million euros. On July 2011 GOWEX subscribed a 7 million € capital increase with a 100 % over-demand (doubling expectations).

With offices in Madrid, Burgos, Buenos Aires, London, San José (Costa Rica), Paris and Shanghai, GOWEX develops a sustainable business model in their WiFi networks, based in efficient and technical quality of their patented platforms: The Roaming platform, which allows users to connect freely in all the cities, the Geolocalization Content and Advertisement platform, which provides a financing business through marketing and advertisement agreements.

In 2011, GOWEX joined the Wireless Broadband Alliance and received a prize for the “Best Web Company” in the Internet Day

In February 2012, Jenaro Garcia GOWEX CEO, received the “Entrepreneur of the Year Award” by Ernst & Young in the category of Innovation

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GOWEX coverage analysis by BANKIA - July 2012

  1. 1. Gowex Spain/ Telecommunications Company update Investment Research Reason: Estimates Revision 20 July 2012 Buy Capturing Wi-Fi growth Recommendation unchanged Share price: EUR 6.01 In our opinion, Gowex is an interesting alternative within the telecommunications closing price as of 19/07/2012 sector, being a winning horse within the wireless broadband growth trend, and Target price: EUR 10.70 the increasing use of Wi-Fi. Despite the positive market performance (+19% in last from Target Price: EUR 6.80 12 months), at current market price Gowex trades at EV/EBITDA’12e of 2.5x and Reuters/Bloomberg GOW.MC/GOW SQ P/E’12e 6.1x, with CAGR 2011-13e 34% in EBITDA and 44% EPS, net cash of Daily avg. no. trad. sh. 12 mth 8,380 EUR22m (28% of current market cap), international growth (42% international sales in Daily avg. trad. vol. 12 mth (m) 0.04 2011) and positive news flow. Price high 12 mth (EUR) 6.40 Price low 12 mth (EUR) 4.33  Gowex accumulates +19% during the last 12 months (vs. Ibex 35’s -31%), in Abs. perf. 1 mth 0.2% line with the positive operating performance, in which we highlight: 1) Abs. perf. 3 mth -2.1% compliance with 2011 guidance: EBITDA +76% EUR16.5m (vs. EUR12.4m Abs. perf. 12 mth 19.2% guidance); 2) positive news flow, increasing backlog (cities, transportation Market capitalisation (EURm) 78 agencies in countries such as China, France, Argentina) and new roaming Current N° of shares (m) 13 agreements. Free float 30%  The scenario is still favourable for growth in Wi-Fi, leaning on the increasing Key financials (EUR) 12/11 12/12e 12/13e connectivity and mobile services (high demand of smartphones, tablets and Sales (m) 67 94 117 connected handsets) and the saturation of 3G-4G mobile networks. Gowex is a EBITDA (m) 17 24 29 neutral manager within the Wi-Fi sector, positioning itself in the middle of the EBITDA margin 24.8% 25.1% 25.2% value chain, offering a neutral and transparent interconnection point, and solutions EBIT (m) 10 17 20 EBIT margin 14.2% 17.8% 17.5% to: 1) lack of standardization; 2) lack of interconnection between a growing number Net Profit (adj.)(m) 7 13 15 of operators; 3) population need to access high speed mobility data; 4) improving ROCE 44.5% 49.9% 39.9% coverage deficit. Net debt/(cash) (m) (22) (18) (18) Net Debt Equity -0.6 -0.4 -0.3  Gowex presented good 2011 results, with sales growing +34% (EUR66.7m), Net Debt/EBITDA -1.3 -0.8 -0.6 +7.6% EBITDA (EUR16.5m) and +41% Net Profit (EUR7.2m). The results came Int. cover(EBITDA/Fin.int) (125.8) (134.9) (204.2) EV/Sales 0.6 0.6 0.5 in above Gowex’ guidance and our estimates (20% in sales, and 37% in EBITDA). EV/EBITDA 2.4 2.5 2.0 EV/EBITDA (adj.) 2.4 2.5 2.0  The company presents a healthy financial situation, with a net cash position of EV/EBIT 4.2 3.5 2.9 EUR22.1m. Despite the more intense CAPEX in 2012-13e (co-investment, P/E (adj.) 8.6 6.1 5.2 accelerating the capturing of critical mass), we do not expect a substantial erosion P/BV 1.8 1.6 1.2 in the company’s financial situation due to the strong cash flow generation. OpFCF yield 58.8% 14.8% 21.7% Dividend yield 1.3% 2.5% 2.9%  Estimates and valuation: Following 2011 results and the positive commercial EPS (adj.) 0.56 0.99 1.17 BVPS 2.72 3.70 4.86 performance, we have adjusted upward our estimates (+62% in EBITDA 2012-13e) DPS 0.08 0.15 0.17 and our fair value up to EUR10.7/share (+57% DCF valuation: WACC 14.5% and g=2.0%). Our new FV implies EV/EBITDA’12e 4.9x and P/E’12e 10.8x. We estimate CAGR 2011-13e of 32% in revenues, +34% in EBITDA and +44% in Net Profit (all organic). 6.5 dv sdy v v dsv 6.0  Its US peer, Boingo, trades at EV/EBITDA’12e 6.9x, well above Gowex’ 2.5x (at 5.5 our EUR10.7/share, GOW would trade at a 30% discount vs. Boingo in terms of 5.0 EV/EBITDA). 4.5 4.0  Buy recommendation, in light of the 78% upside potential to our new fair value. In 3.5 our opinion, Gowex is an interesting alternative within the telcos sector, as a winner Jul 11 Aug 11 Sep 11 Oct 11 Nov 11 Dec 11 Jan 12 Feb 12 Mar 12 Apr 12 May 12 Jun 12 Jul 12 within the mobile broadband growth trend and increasing use of Wi-Fi. GOWEX MAB (Rebased) Source: Factset Shareholders: Jenaro García 60%; Alvasebi 10%; Analyst(s): David Cabeza Jareño +34 91 4367818 dcabeza@bankia.com For company description please see summary table footnoteProduced by: All ESN research is available on Bloomberg (“ESNR”), Thomson-Reuters, Capital IQ, TheMarkets.com, FactSetDistributed by the Members of ESN(see last page of this report)
  2. 2. GowexCONTENIDOSCapturing Wi-Fi growth .............................................................................. 3 High double digit growth and improving mix. ......................................... 4 Improving profitability 6 Positive news flow: increasing critical mass 7 Sector scenario: Wi-Fi, complementing wireless networks ................... 8 Gowex. Positioning and strategy ............................................................ 10 Organic growth 10 Co-investment to accelerate growth 11 Inorganic growth 12 Estimates adjusted ................................................................................... 13 Financial strength. EUR22m net cash. 13 Valuation EUR10.7/share ......................................................................... 14 Multiples comparison 15 Comparable transactions 16 Market performance and shareholder structure 16 Risk Factors 17 Annex ......................................................................................................... 18 Company description and history 18 ESN Recommendation System ............................................................... 25  Page 2
  3. 3. Gowex Capturing Wi-Fi growth Gowex accumulates +19% during the last 12 months (vs. Ibex 35’s -31%), in line with the positive operating performance, in which we highlight: 1) compliance with 2011 guidance: EBITDA +76% EUR16.5m (vs. EUR12.4m guidance); 2) positive news flow, increasing backlog (cities, transport means, especially abroad) and new roaming agreements. The scenario is still favourable for growth in Wi-Fi, leaning on the increasing connectivity services and mobile services (high demand of smartphones, tablets and connected handsets) and the saturation of 3G-4G mobile networks. According to Cisco, mobile data traffic will double worldwide in 2012, and traffic will increase another 78% until 2014. In parallel, we observe a similar growth in Wi-Fi: the number of Wi-Fi connection points is expected to reach 2.7m in 2014, with use growing 200%. Gowex occupies a neutral management position within the sector, positioning itself in the middle of the value chain, offering a neutral and transparent interconnection point, and solutions to: 1) lack of standardization; 2) lack of interconnection between the growing number of operators; 3) population need to access high speed data mobility; 4) improving coverage deficit. Gowex presented good 2011 results, with sales growing +34% (EUR66.7m), +7.6% EBITDA (EUR16.5m) and +41% net profit (EUR7.2m). The results came in above Gowex’ guidance and our estimates (20% above sales, EUR56m, and 37% higher in EBITDA, EUR12m). Following 2011 results and the positive commercial performance, we have adjusted estimates up (+62% in EBITDA 2012-13e) and our fair value to EUR10.7/share (+57%), discounting EV/EBITDA’12e 4.9x and P/E’12e 10.8x.Gowex. Main figures 2010 2011 Var % 2010 2011 Var % Revenues 49.6 66.7 34% WiFi cities 35 52 49% Gowex Telecom 23 20 -13% Transportation agencies 1 15 1400% Gowex Wireless 26.7 46.5 74% Freemium users (m) 340 740 118% Gross Margin 18.5 29.8 61% Pages viewed (m) 1450 4600 217% Gowex Telecom 4.3 5.8 35% Roaming operators 65 95 46% Gowex Wireless 14.2 23.9 68% Revenues Spain 70% 58% -12.0 p.p. EBITDA 9.4 16.5 76% Revenues International 30% 42% 12.0 p.p. Net Profit 5.1 7.2 41% Recurrent revenues (Wireless) 55% 63% 8.0 p.p.Source: Gowex: Despite the positive market performance, at current market price Gowex trades at EV/EBITDA’12e of 2.5x and P/E’12e 6.1x, with CAGR 2011-13e 34% in EBITDA and 44% EPS, net cash of EUR22m (28% capitalization), international growth (42% international sales in 2011) and positive news flow. It’s US peer, Boingo (USD250m market cap), trades at EV/EBITDA’12e 6.9x and P/E 12e 37x, well above Gowex’ current multiples. We recommend Buy, considering the 78% upside potential to our fair value (EUR10.7/share). Page 3
  4. 4. Gowex High double digit growth and improving mix. In 2011, 70% of the revenues (80% of gross margin) were generated in Gowex Wireless (vs. 54% in 2010), with 52 cities, 15 transport means and 95 operators (vs. 35, 1 and 65 respectively a year earlier). The remaining 30% was generated in Gowex Telecom. 42% of the revenues were generated abroad (vs. 30% in 2010), reinforcing its presence in Europe, LatAm and Asia, with integral Wi-Fi city modules (development, commercialisation and management).Gowex: Activity Revenues Mix (2011) Gowex. Geographic Revenues Mix (2011) Engineering International & consulting 42% 41% Network Media (roaming & platform offloading) 6% 23% Gowex Spain Telecom 58% 30%Gowex. Revenues Per Activity (2007-13e) Gowex. Geographic Revenues Mix (2007-13e) 140 140.0 120 Gowex Telecom Gowex Wireless 120.0 Spain International 100 100.0 59.9 80 80.0 95 45.4 60 73 60.0 28.0 40 47 40.0 14.9 27 4.8 11 57.1 20 3 20.0 1.6 49.1 1 0.0 30.4 34.7 38.7 17 21 25 23 20 21 22 17.0 22.6 0 0.0 2007 2008 2009 2010 2011 2012e 2013e 2007 2008 2009 2010 2011 2012e 2013eSource: Gowex. Estiamtes Bankia Bolsa Source: Gowe. Estimates Bankia Bolsa Gowex Wireless represented 70% of the revenues in 2011 and 80% of Gowex’ gross margin, generating EUR47m revenues (vs. EUR3m in 2008). Out of its 3 segments, network and engineering activities are performing better than expected, whereas media is evolving below estimates, affected by the economic context in Spain. In 2011, 63% of Gowex Wireless’ revenues were recurrent (vs. 55% in 2010). We distinguish: 1) The Network activity (32% of Gowex Wireless revenues in 2011) includes recurrent roaming, offloading, interconnection and access activities. Sales grew +78% in 2011 thanks to the increasing critical mass and the greater use of wireless services (resulting in increasing roaming, offloading and interconnections for Gowex). Currently there are over 95 operators using the platform, creating a network with >400,000 access points (the clients of these operators are potential consumers of Gowex’ roaming services). Page 4
  5. 5. Gowex 2) Engineering, consultancy and maintenance (58% Wireless revenues in 2011). Gowex offers the following services: a) consultancy: designing the network, non-recurrent revenues, high margins; b) installation: Gowex controls the process, but outsources the physical installation to an engineer, non-recurrent revenues and margins in line with the group’s average; and c) management/maintenance of Wi-Fi networks: software maintenance, generating recurrent revenues and margins in line with the group’s average. The better than estimated performance of this unit was owing to the good performance of international projects, trend that we believe will continue in upcoming years, bearing in mind the recently announced agreements with cities and transport companies. 3) Media (9% Wireless revenues in 2011) includes advertising, applications and services. Despite growing +30% in revenues to EUR4.3m, it is the activity with the worse relative performance in 2011, affected by the difficult advertising scenario. In our view, the higher weight of the international activity (opening of new international Wi-Fi cities) and the heavy weight of geo-localised advertising in the advertising mix should result in growths in future years (we estimate 2 fold revenues in 2013 vs. 2011).Gowex Wireless. Recurrent Revenues Gowex Wireless: Network (roaming, offloading, access) 50.0 46.1 50 Recurrent Non recurrent 45.0 Network (roaming & offloading) 45 40.0 40 35.0 17 35 27.2 30.0 30 25.0 25 20 12 20.0 15.0 15 29 15.0 8.4 10 10.0 15 3.7 5 5.0 0.7 0 0.0 2010 2011 2008 2009 2010 2011 2012e 2013eGowex Wireless. Engineering Gowex Wireless. Media 45.0 10.0 39.5 39.7 8.7 40.0 9.0 Engineering & consulting Media platform 35.0 8.0 30.0 27.2 7.0 6.3 6.0 25.0 5.0 4.3 20.0 15.0 4.0 3.3 15.0 3.0 10.0 6.4 2.0 5.0 2.5 1.0 0.3 0.0 0.0 0.0 2008 2009 2010 2011 2012e 2013e 2008 2009 2010 2011 2012e 2013eSource: Gowex. Estimates Bankia Bolsa Source: Gowex. Estimates Bankia Bolsa Page 5
  6. 6. Gowex Gowex Telecom (30% revenues and 20% gross margin) is focused on B2B products and telecommunication services (broadband, data transmission circuits, private virtual networks, etc) via its commercial exchange platform. Telecom revenues proceed from the following:  Adhesion fee for new members (interconnection and physical infrastructure) and of membership (monthly), according to volume, lines to be connected, etc.  Fees from purchase/sales operations in broad band at transparent and competitive prices, data transmission circuits, voice services.  Consultancy, and infrastructure management services (monitorising, management and back-up) and equipment storage. Since 2010, the company is modifying the way in which revenues and costs proceeding from intermediation are accounted (end of the process in 2012). The intention is to adjust the accounting of the affiliate to the scope of intermediation. The impact on results has been lower revenues and costs in 2010 and 2011. The gross margin in absolute terms has not been affected nor the rest of the P&L lines which depend on the gross margin (to be determined by the net result in added value service sales plus fees accrued from intermediation services). Despite the fall in revenues in 2011 (see table), the gross margin increased (+35%, EUR5.8m) thanks to the higher volumes. Including the intermediation activity, growth would have reached +79% (from EUR27.0m to EUR48.3m). For the next few years we estimate a prudent, single digit growth in sales and stable gross margin (28% vs. 29% in 2011).Gowex Telecom. Sales & Gross Margin (2007-13e) Gowex Telecom. Functioning 30.0 35% Sales Gross margin (%) 25.0 30% 25% 20.0 20% 15.0 15% 10.0 10% 5.0 5% 0.0 0% 2006 2007 2008 2009 2010 2011 2012e 2013eSource: Gowex. Estimates: Bankia Bolsa Source: Gowex Improving profitability The change in revenues mix, with greater weight of Wireless (wider margins), explains the better margins seen in recent years, from 9.5% EBITDA margin in 2008 to 24.8% in 2011. Regarding EBIT margin, in 2011 EUR3.5m were provisions (5% of the sales vs. 3% in 2010, we are estimating EUR2.0m for 2012-13e), and an accelerated depreciation of assets was carried out which partially explains the lower rise in percentage points of the EBIT margin. For 2012 we estimate EBITDA mg of 25.1%, to remain stable in 2013-14e and EBIT margin of 17.5% to 18% in said period, with costs growing in line with revenues. Page 6
  7. 7. GowexGowex. Sales & Margins Performance (2008-14e) Gowex. Better PipelineSource: Gowex. Estimates: Bankia Bolsa Source: Gowex Positive news flow: increasing critical mass Throughout 2011 and year to date, the news flow and commercial momentum has been positive, reinforcing Gowex’s pipeline. We highlight:  15 public transport companies (EMT Madrid, Buenos Aires’ underground).  France: Bordeaux (Dec’11), Gowex’ first Wi-Fi city in France, Paris (announced in June 2012, 48 transport station).  Argentina: 5 cities, urban transport.  China: Increasing penetration. Agreement with CRSC (second rail engineering company in China), high speed trains, 1 city in China (Nanjing).  Agreements with iPass, Boingo, Nintendo, AT&T, Skype, Korean Telecom, MASMovil  Gowex formed part of WBA (Wireless Broadband Alliance, 95 operators).  Offices opened in Shanghai, Paris, Buenos Aires, London, US and Arabian Emirates.  Creation of Gowex Mobile, focusing on developing applications based on services for mobile handsets, making access to geo-localised, discount and downloading easier for WI- FI network users. Page 7
  8. 8. Gowex Sector scenario: Wi-Fi, complementing wireless networks The Wi-Fi services market continues growing substantially, at the same time as mobile data traffic, leaning on the increasing connectivity services (high demand of smartphones, tablets, and connected handsets) and the saturation of 3G-4G mobile networks. Much of the consumptions in wireless data take place in fixed or nomad areas, where Wi-Fi services can be found at low costs (and frequently for free). As a result, consumers have learned to accept Wi-Fi as a complement to the 3G and 4G data programs. Some relevant figures:  According to the Wireless Broadband Alliance (report 2011), the number of public Wi-Fi access points around the world will increase from 1.3m in 2011 to 5.8m in 2015 (CAGR 20’11-153 +45%).  According to Cisco’s Visual Networking Index (VNI), mobile data traffic will multiply by 256x between 2010 and 2015, reaching 6.3 exabytes/month in 2015. The global mobile traffic will continue exploding, growing 3x quicker than fixed IP traffic during the same period. Have telecom operators considered Wi-Fi priority in recent years? In general the answer would be no. Telecom operators have concentrated on developing 3G networks (and designing 4G). Wi-Fi had simply grown in parallel. Some recent changes (included in Cisco’s VNI) are: 1) Strong growth of terminals with Wi-Fi. ABI Research estimates a prudent rise in terminals with Wi-Fi (smartphones, tablets, video game consoles) of >300% between 2009-2015, up to over 2bn world-wide. 2) Half the mobile traffic in networks is Wi-Fi 3) Substantial growth in Wi-Fi access points 4) Increasing moves from free access to Wi-Fi hotspots. 5) Wi-Fi is becoming a viable, mobile data downloading technology. 6) Wi-Fi is forming part of the more ample, wireless network design.Projected Global IP Traffic by Access Network. Wi-Fi hotspots world-wide (millions)Source: Cisco Visual Networking Index. Global IP Traffic Forecast, 2010–2015 Source: Alcatel Lucent (2012, report Telecoms&Media) Page 8
  9. 9. Gowex Given the fundamental changes in the market, Cisco considers Wi-Fi will be a viable alternative to the wireless access network. The technology is ready, there is ample coverage, and clients are using Wi-Fi as an alternative to mobile networks. Additionally, service providers are finding new ways to monetize investments via the creation of Wi-Fi networks. Location of Mobile Data usage (% of Time Spent in Activity). Wi-Fi Access by U.S. Smartphone Users (% o/total Browsing) Source: Cisco IBSG Connected Life Market Watch Source: Cisco IBSG Mobile Cloud Watch, 2011 Based on observations, investigations and experience in the industry and interactions with service providers, Cisco has made 6 assertions regarding WI-FI’s future and its relation with traditional mobile telephony networks. 1) Wi-Fi covers the majority of the locations where present. 2) Much of what we do is nomad, not mobile. 3) The new nomad terminals will consume even higher amounts of mobile data. 4) Consumers use Wi-Fi easily as a substitute or complement to mobile 5) Wi-Fi can offer a more profitable solution and better user experience 6) There are various alternatives to develop profitable Wi-Fi models.Wi-Fi. Business models (I) Wi-Fi. Business model (II). Source of value and returnsSource: Cisco IBSG, 2011 Source: Cisco IBSG, 2012 Page 9
  10. 10. Gowex Gowex. Positioning and strategy The context is therefore favourable for Gowex’ business model. The growth outlook for the mobile data market, the new terminals, new applications and services related to mobility are exceptional. Demand on behalf of users and need to lay out wireless networks is ever increasing, as well as the number of operators (wireless market with higher number of operators vs. mobile telephony). Wi-Fi is amongst the highest growth technologies thanks to the low development cost (a tenth of 3G), the use of frequencies are not subject to licenses (2.4GHz and 5GHz) and the high number of terminals integrating WI-FI technology. Gowex occupies a neutral management position within the Wi-Fi sector, offering solutions to: 1) lack of standardization; 2) lack of interconnection between the growing number of operators; 3) population need to access high speed data mobility; 4) improving coverage deficit. Gowex positions itself in the centre of wireless internet value chain, offering a neutral and transparent interconnection point. Gowex’s growth keys are: 1) positioning of Gowex’ Roaming Platform as a reference solution in the market for various agents (that we believe will be achieved with the increasing number of cities connected); 2) international expansion via agreements with cities; and 3) potential operating leverage (scalable model); 4) capacity to monetise Wi-Fi networks via the advertising WILOC platform and geo-localised contents.Gowex. Positioning Gowex. Revenues DiversificationSoruce: Gowex Source: Gowex Organic growth Gowex enjoys a leading position and high penetration in exploiting Wi-Fi cities in Spain, while progressively increasing its international presence. The company’s strategy is to repeat the successful business model in other markets and cities in Europe, Asia and Latin America (considering co-investments as an alternative), and continue attracting operators. The circle is virtuous, in which the increasing critical mass and access points increases the company’s appeal, be it to obtain new contracts in cities (developing Wi-Fi cities) and operators (roaming, offloading) apart from geographically diversifying revenues. Specifically speaking we highlight the following strategy lines: Page 10
  11. 11. Gowex Continue growing in Wi-Fi cities and associated networks. Continue growing in international network deployment, as a priority to achieve higher, recurrent revenues. The strategy is to do so in leading cities, obtaining greater commercial capacity, network effects and large economies of scale. The presence in leading cities would allow the greater use of operator’s demand to download their 3G networks, as this need is more acute in large cities. In certain cases, Gowex will co-invest in cities under the PPP consortium format, in which Gowex is the promoter thus allowing for greater efficiency and higher economies of scale. Leveraging over Gowex’ neutral, multi-lateral MSP platform: The intention is to take advantage of the positioning obtained, thanks to the higher number of cities, projects and operators already working within Gowex’ platform, thus reaching higher economies of scale and network externalities, as well as the expulsion effect of certain competitors. Attracts larger operators to become members of Gowex’ MSP platform. To date, the company has mainly obtained small, mid and large operators but always within WI-FI. The majority of Gowex’s current attraction is in allowing the adhesion of large operators (domestic and international) to integrate their 3G networks with Gowex’ WI-FI cities. Final user: increase the appeal of Gowex’ services in developing activity with final users and the Freemium model. Gowex has developed a software solution, including a business model, that is installed in client’s terminals allowing the transparent use of all networks, including Wi-Fi Cities and networks associated to Gowex’ technological platforms.Co-investment to accelerate growthSince 2009, Gowex has played important roles in promoting Public/Private Consortiums tocreate Wi-Fi cities, participating in the promotion, design and creation of projects andtraining consortiums; later via a stake (direct or indirect) in executing the implementationand laying out the infrastructure, and finally manage, exploit and operate the project.During Gowex’ listing in 1Q’10, one of the points underscored in our investment case was thelow investment requirements. However, in some cases, Gowex believes it essential to carryout the mentioned functions and participate as co-investor in the consortium. Thisdecision implies:  Acquiring a controlling stake in the consortium or, on occasions, a minority stake (via minority reinforcement agreements)  Allows the development of big projects, greater surface and longer exploitation period.  Increase its competitive advantage vs. other players.  On the other hand, the co-investment demands a greater investment effort for Gowex – reflected in our estimates.Developing this co-investment policy in 2010 and 2011 allowed the company to surpasstargets regarding Wi-Fi cities and economic results. In our view, capturing new cities,concessions etc will continue accelerating the capturing of sufficient critical mass toconvert Gowex’ Roaming Platform in one of the reference solutions in the market.The investment and co-investment plan is mainly focused on leading cities or entitiesdependant on the former (municipal transport etc). The business case on these co-investments greatly depends on the consortium model proposed, but in the majority of thecases implies Gowex investing between 10 – 25% of the total investment and includes hiringGowex as the main contractor or implementer of its technology (as the base platformmaking up the Wi-Fi City). Page 11
  12. 12. GowexGowex. Co-investment Formulae. Gowex. Example of Co-investmentSource: Gowex Source: Gowex Inorganic growth Gowex carried out two capital increases in 2010 (listing to MAB) and in 2011 (June), capturing EUR6.0m and EUR6.9m respectively, earmarked to finance growth (organic and inorganic). Currently, the company holds a net cash position of EUR22m. The company stated its interest in accelerating its national and international expansion via acquisitions, such as engineering companies with demonstrated experience in wireless networks, know-how, and a reasonable client portfolio (cities, operators). Gowex continues seeking opportunities in this field, with an estimated size below EUR5m per operation, ruling out various operations in the past (to date there is only one candidate). Despite the lack of track record, the potential size of acquisitions limits the reinvestment risk. We do not include any potential operation in our estimates or valuation. Page 12
  13. 13. Gowex Estimates adjusted  We revise our estimates for 2012 onwards up following the good 2011 results and the commercial advances announced – reinforcing the pipeline and visibility for upcoming years. For 2012-13e our estimates increase 50% in revenues and 62% in EBITDA.  CAGR 2011-13e 32% in revenues, 34% in EBITDA and 44% in Net Profit, with Wireless, international and recurrent revenues progressively increasing their weight in total group revenues.  Our estimates are below Gowex’ 2012 guidance (20% in revenues and 19% in EBITDA). Despite this, for 2012 we estimate 42% growth in revenues and 43% in EBITDA, up to EUR23.7m.  Gowex will release 1H’12 results in September, during which we believe the company may update its 2012 guidance (disclosed in mid-2011).Gowex. Estimates adjustment Guía Gowex. 2011 vs. reported & 2012e vs. Bankia Bolsa 2011a 2012e 2013e CAGR 11-13e 2011 2011 Diff.% 2012e 2012e Diff.% Old 55.8 66.1 74.6 16% (GOW) (pub) (GOW) BKIA B. Sales New 66.7 94.5 117.0 32% Revenues 66.5 66.7 0.3% 118.7 94.5 -20% Dif.% 19.5% 42.9% 56.8% G.Wireless 43.8 46.9 7.1% 106.5 73.0 -31% Old 12.0 15.3 17.4 20% G.Telecom 22.7 20.2 -11.3% 12.2 21.5 76% EBITDA New 16.5 23.7 29.5 34% Gross margin 25.8 29.8 15.5% 56.0 43.2 -23% Dif.% 37.6% 54.7% 69.4% G.Wireless 21.2 23.9 12.6% 51.1 37.2 -27% Old 7.4 9.2 10.3 18% G.Telecom 4.5 5.8 27.6% 4.9 6.0 23% Net Profit New 7.2 12.8 14.9 44% Operating expenses 13.4 13.2 -0.9% 26.6 19.6 -26% Dif.% -2.4% 38.7% 44.9% EBITDA 12.4 16.5 33.1% 29.4 23.7 -19%Source: ESN Bankia Bolsa estimates, Factset Source: Gowex (DAR 2011), ESN Bankia Bolsa estimates Financial strength. EUR22m net cash.  Gowex presents a healthy financial situation, with a net cash position of EUR22m at Dec’11, strengthened by both the cash generation and EUR6.9m capital increase in mid-2011. Gowex has a low leveraged financial structure, with equity representing around 60% of the balance (at December 2011).  CAPEX: we estimate more intense CAPEX in 2012-14e, due to the co-investment policy during said period. We revise our CAPEX forecasts up to EUR16.1m in 2012e (17% over sales) and EUR17.5m in 2013e (15% over sales). Despite this rise we do not expect a substantial erosion in cash levels (estimating EUR18m net cash in 2012-13e, not including possible acquisitions).  Shareholders’ remuneration policy: in 2011 Gowex distributed EUR1.0m in dividends against 2010 (19% pay out) and in 2012 another EUR1.0m (EUR0.077/share, 14% EPS 2011). For upcoming years we estimate 15% DPS (reinvesting the rest of the cash). Page 13
  14. 14. GowexGowex. ND/EBITDA Gowex. Breakdown of aggregate 5 yrs Free Cash Flow 40 0.00 0.00 30 -0.10 08 09 10 11 12e 13e -0.20 -0.20 -0.40 20 -0.60 30.2 27.5 -0.30 10 -0.80 16.2 14.0 14.7 16.9 -0.40 8.6 -1.00 0 2.0 -0.50 -1.20 -0.60 -1.40 -10 -20.4 -0.70 -1.60 -20 Gearing Debt/EBITDA (rhs) -30 Net profit Non cash Cash Flow Change in Capex Operating Dividends Capital Free cash items Net Working free cash flow increase flow CapitalSource: Gowex. Estimates ESN Bankia Bolsa Source: Gowex. Estimates ESN Bankia Bolsa Valuation EUR10.7/share The positive adjustment in estimates together with the better valuation hypothesis triggers a +57% rise in our fair value on Gowex, up to EUR10.7/share (vs. previous EUR6.8/sh). We carried out a DCF valuation for the period 2012-18e, applying prudent hypotheses: WACC 14.5% (penalized by the share’s low liquidity and the net cash position) a 2.0% perpetual growth, and EBITDA margin in 2018e of 21% below the 25% estimated for 2012- 14e.GOWEX DCF VALUATION TO 31-Dec-12CASH FLOW (EUR m) 2011 2012e 2013e 2014e 2015e 2016e 2017e 2018eNet sales 66.7 94.5 117.0 144.8 176.5 197.9 219.1 216.7EBIT 9.5 16.8 20.4 24.8 27.4 28.9 32.1 31.4Normative tax rate 25% 25% 27% 28% 28% 28% 28% 28%NOPLAT 7.1 12.6 14.9 17.8 19.7 20.8 23.1 22.6Depreciations and other provisions -7.0 -6.8 -9.0 -11.4 -13.8 -15.8 -17.7 -15.2Gross operating cash flow 14.1 19.5 23.9 29.2 33.5 36.6 40.8 37.8Capital expenditure -10.7 -16.1 -17.5 -18.8 -19.4 -15.8 -15.3 -15.2Change in net working capital 0.0 -4.1 -2.8 -3.8 -4.6 -2.3 -2.3 -0.4Cash flow to be discounted 3.5 -0.7 3.6 6.6 9.5 18.4 23.1 22.2DCF EVALUATION (EUR m) 2012e 2013e 2014e 2015e 2016e 2017e Nominal yearWACC 14.5% 14.5% 14.5% 14.5% 14.5% 14.5% 14.5%Discount Rate factor 1.00 0.87 0.76 0.67 0.58 0.51 0.44Discounted cash flow -0.7 3.1 5.0 6.3 10.7 11.7Cumulated DCF -0.7 2.4 7.5 13.8 24.5 36.3WACC & DCF ANALISYSFree risk rate 4.50% Cumulated DCF 36.3 - Net financial debt (Cash) (11) -22Company risk factor 2.50 Perpetual growth rate (g) 2.0% - Minorities (estimated value) 0Market risk premium 4.00% Normalised Annual CF 22 + Associates 0Cost of Equity (Ke) 14.50% Terminal Value at Nominal Year 178Cost of debt (gross) 5.5% Disc.Rate of Terminal Value 0.44Normative tax rate 30.0% NPV Terminal Value 78.8 Equity Market Value (EUR m) 138Cost of Debt Net (Kd) 3.85% Number of shares (m) 12.93Target gearing (D/E) % Kd 0% Financial assets (treasury stock) 1.1 Fair Value per share (EUR) 10.7% Ke 100% Enterprise value (EUR m) 116.2 Price (EUR) 6.01WACC 14.5% Potential upside (downside) 78%Source: ESN Bankia Bolsa estimates Page 14
  15. 15. Gowex Our fair value discounts 2012e multiples of 4.9x EV/EBITDA and 10.8x P/E (3.9x and 9.3x 2013e multiples, respectively). Considering the 78% upside potential we have a Buy recommendation. At current market price, Gowex trades at EV/EBITDA 2.5x and P/E’12e 6.1x, that in our opinion does not reflect the company’s potential growth (CAGR 11-13e +32% sales, +34% EBITDA and 45% net Profit), financial health (net cash represents 28% of the current market cap) and the positive track-record. Implicit ratios @ FV 2010 2011 2012e 2013e Price 3.4 4.8 10.7 10.7 EV / Sales 0.6x 0.6x 1.2x 1.0x EV / EBITDA 3.1x 2.4x 4.9x 3.9x EV / EBIT 4.7x 4.2x 6.9x 5.7x PER 7.5x 8.6x 10.8x 9.3x Source: ESN Bankia Bolsa  Sensitivity analysis (WACC & g) Gowex. Sensitivity Analysis WACC Perpetual growth rate (g) 10.68 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 11.5% 13.0 13.4 13.8 14.3 14.8 15.4 16.0 12.5% 11.8 12.1 12.5 12.8 13.2 13.7 14.2 13.5% 10.9 11.1 11.4 11.7 12.0 12.3 12.7 14.5% 10.0 10.2 10.4 10.7 10.9 11.2 11.5 15.5% 9.3 9.5 9.7 9.9 10.1 10.3 10.5 16.5% 8.7 8.8 9.0 9.2 9.3 9.5 9.7 17.5% 8.2 8.3 8.4 8.5 8.7 8.8 9.0 Source: ESN Bankia Bolsa estimates Multiples comparison Although there is no purely, comparable company with Gowex (due to its particular business model, diversification, etc) within Wireless sector there are two listed companies in the US (they aggregate operators networks to offer roaming and interconnection services): - Boingo: >500,000 hotspots world-wide, began trading in May 2011 in the Nasdaq. Boingo is an international, WI-FI service provider, offering retail clients (final users) and wholesalers access service to Wi-Fi points. In 2011 the company generated USD95m revenues and USD28m EBITDA. Boingo’s 2012 guidance points to +19% revenues and +30% EBITDA. - iPass. 750,000 hotspots in 120 countries. Offers mobile connectivity services to companies. In 2011 it generated USD140m revenues (falling 9%) and small loss at operating level (EBITDA USD-0.2m). Boingo trades at 6.9x EV/EBITDA’12e vs. Gowex’ 2.5x. At our fair value (EUR10.7/share, implying 4.9x EV/EBITDA’12e), Gowex’ discount vs. Boingo would be of 30%, which we would consider justified considering Boingo’s greater liquidity (trades in the Nasdaq).Company Price Mkt. Cap. EV/EBITDA PER Mg EBITDA CAGR EBITDA DN/EBITDA Performance % (EUR) (EUR m) 2012e 2013e 2012e 2013e 2012e 2011-13e 2011 1m 6m 12mBoingo Wireless Inc. 8.73 303 6.9x 5.2x 36.9x 26.5x 33.4% 29.4% -3.3x -2% 37% 37%iPass Inc. 116 26.2x -5% 59% 64%Gowex (Bankia) 6.01 78 2.5x 2.0x 6.1x 5.2x 25.1% 33.6% -1.3x 1% 5% 19%Gowex (Factset) 6.01 78 2.2x 1.6x 6.3x 5.3x 25.1% 50.8% -0.9x 1% 5% 19%Source: Facset, Bankia Bolsa Page 15
  16. 16. Gowex Comparable transactions The Wi-Fi sector is a young, atomised sector in which, in our opinion, a consolidation process must take place to seek critical mass. In recent months some operations have taken place, granting visibility to the sector’s growth. The most recent has been Arqiva Broadcast Holding’s acquisition of Spectrum Interactive Ltd, acquiring 100% for GBP23.4m. Spectrum Interactive is one of the largest, independent Wi-Fi operators in the UK, with 15,500 access points in 2,100 Premium locations (hotels, restaurants, airports, etc). According to the official release, the agreement will allow Arqiva to accelerate growth in the wholesale mobile data activity via the acquisition of a scalable platform. Following this acquisition Arquiva will be one of the largest Wi-Fi access point providers in UK. Market performance and shareholder structure Gowex began trading in the alternative market (MAB) on March 12th 2010, via a subscription offer among institutional investors at EUR3.5/share. Since then the stock has enjoyed a +75% performance. Apart from trading in the Spanish MAB, it also trades in the French Alternext since June 2010. The dual listing increases and diversifies its shareholder structure, and crosses a larger number of trading operations. Gowex’ intention is to jump to the spanish continuous market and also to one or various renowned international markets. Gowex’ shareholder structure is made up by Mr. Jenaro Garcia (CEO, 60% via Cash Devices and Biotelgy VC) and the rest of the management, that jointly hold 70.3% of the group. The free float is 29.7% (c. half of free float is held by institutional investors).Gowex. Price performance Gowex. Shareholder structure Free-float 30% Jenaro García 60% Alvasebi 10%Source. Facset: Source: Gowex & ESN Bankia Bolsa Page 16
  17. 17. GowexRisk Factors1) Risk of not attaining sufficient critical mass that would convert the GOWEX Roaming Platform into one of the reference solution in the market.2) Technological risks: obsolescence, network security.3) Risk of new competitors.4) Risk in relation to the position of the incumbent and large operators.5) Risk of depending on key people.6) Risk of acquisitions (although not included in our estimates, there is the risk of overpaying for potential acquisitions).7) Risk of reduced market liquidity. SWOT analysis STRENGTHS WEAKNESSES  The backlog of GOWEX Wireless.  Relatively small size.  Neutral positioning and technological  Reduced liquidity in Alternative markets innovation capabilities. (MAB, Alternext)  Strong financial position (net cash).  GOWEX Telecom’s positive track record. OPPORTUNITIES THREATS  Development of WiFi cities abroad.  The position of the incumbent and large operators.  Wireless roaming platform as a reference in the sector.  New competitors.  Potential offered by geolocalised Internet  Technological obsolescence. advertising. Page 17
  18. 18. Gowex Annex Company description and history Group Gowex operates in the telecommunication sector, holding a unique position as a neutral infrastructure manager and interconnection service provider for operators, exploiting telecommunication networks. Gowex defines itself as an agent or neutral player, with the intention to endow the market with the electronic communications, instruments and tools necessary to make the best and most efficient use of the latter (internet broad band, data transmission circuits, use of radio electric spectrum and WI-FI). Let’s Gowex is the result of the changed corporate name in 2008 from IBER-X (Iber Band Exchange SA), founded in 1999 as a telecommunications service company for wholesalers. The main milestones are summed up in the following graph:Gowex. MilestonesSource: Gowex The Group’s growth pillars are 1) creation, development and exploitation of technological platforms; 2) technological and legal consultant; 3) creator of contents, service and geo-localised advertising platforms and WI-FI points map; 4) exploitation of WI-FI Cities. Gowex bases its activity on two main business lines: 1) GOWEX Wireless (group’s main growth driver) provides diverse services related to wireless telecommunications: consultancy, management and exploitation of WI-FI networks, wireless roaming platform, advertising and electronic geo-localised commerce of wireless networks. 2) GOWEX Telecom Services (traditional activity, previously Iber-X): managing and exploitation of a commercial product exchange platform and services for the B2B telecommunications market and certain accessory services. Page 18
  19. 19. GowexGowex: Summary tablesPROFIT & LOSS (EURm) 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013eSales 24.2 35.2 49.6 66.7 94.5 117Cost of Sales & Operating Costs -21.9 -29.7 -40.3 -50.2 -70.8 -87.5Non Recurrent Expenses/Income 0.0 0.0 0.0 0.0 0.0 0.0EBITDA 2.3 5.5 9.4 16.5 23.7 29.5EBITDA (adj.)* 2.3 5.5 9.4 16.5 23.7 29.5Depreciation -0.8 -1.0 -1.6 -3.4 -4.8 -7.0EBITA 1.5 4.5 7.8 13.1 18.8 22.4EBITA (adj)* 1.5 4.5 7.8 13.1 18.8 22.4Amortisations and Write Downs -0.3 -0.9 -1.6 -3.6 -2.0 -2.0EBIT 1.3 3.6 6.3 9.5 16.8 20.4EBIT (adj.)* 1.3 3.6 6.3 9.5 16.8 20.4Net Financial Interest 0.0 -0.1 0.1 0.1 0.2 0.1Other Financials 0.0 0.0 0.0 0.0 0.0 0.0Associates 0.0 0.0 0.0 0.0 0.0 0.0Other Non Recurrent Items 0.0 0.0 0.0 0.0 0.0 0.0Earnings Before Tax (EBT) 1.2 3.5 6.3 9.6 17.0 20.6Tax -0.3 -0.6 -1.2 -2.4 -4.3 -5.5Tax rate 21.9% 17.9% 18.7% 25.1% 25.0% 26.8%Discontinued Operations 0.0 0.0 0.0 0.0 0.0 0.0Minorities 0.0 0.0 0.0 0.0 0.0 0.0Net Profit (reported) 1.0 2.9 5.1 7.2 12.8 15.1Net Profit (adj.) 1.0 2.9 5.1 7.2 12.8 15.1CASH FLOW (EURm) 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013eCash Flow from Operations before change in NWC 2.0 4.8 8.2 14.2 19.6 24.1Change in Net Working Capital 0.0 -2.1 -8.1 24.9 -4.1 -2.8Cash Flow from Operations 2.0 2.7 0.2 39.1 15.5 21.3Capex -1.4 -1.6 -5.8 -10.7 -16.1 -17.5Net Financial Investments 0.0 0.0 0.0 0.0 0.0 0.0Free Cash Flow 0.6 1.1 -5.6 28.5 -0.6 3.7Dividends 0.0 0.0 1.0 1.0 1.9 2.2Other (incl. Capital Increase & share buy backs) -1.8 -1.3 3.7 5.1 -2.7 0.0Change in Net Debt -1.1 -0.2 -0.9 34.5 -1.3 6.0NOPLAT 0.9 2.5 4.4 6.7 11.8 14.3BALANCE SHEET & OTHER ITEMS (EURm) 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013eNet Tangible Assets 1.3 1.7 5.8 13.3 22.9 31.9Net Intangible Assets (incl.Goodwill) 1.7 1.9 2.0 2.0 3.6 5.2Net Financial Assets & Other 0.2 0.2 0.5 0.7 0.7 0.7Total Fixed Assets 3.2 3.8 8.3 16.0 27.2 37.8Inventories 0.0 0.0 0.0 0.0 0.0 0.0Trade receivables 19.4 20.7 25.9 9.9 9.4 11.7Other current assets 0.0 0.0 0.0 0.0 0.0 0.0Cash (-) -2.3 -5.8 -15.1 -31.2 -27.6 -27.3Total Current Assets 21.8 26.5 41.1 41.1 37.1 39.0Total Assets 25.0 30.3 49.4 57.1 64.3 76.8Shareholders Equity 9.5 12.5 22.9 35.1 47.9 62.8Minority 0.0 0.0 0.0 0.0 0.0 0.0Total Equity 9.5 12.5 22.9 35.1 47.9 62.8Long term interest bearing debt 0.8 1.2 3.3 6.2 6.2 6.2Provisions 0.0 0.0 0.0 0.0 0.0 0.0Other long term liabilities 0.4 0.6 1.4 2.6 -5.1 -8.1Total Long Term Liabilities 1.2 1.8 4.7 8.8 1.1 -1.9Short term interest bearing debt 0.9 1.9 2.6 2.9 2.9 2.9Trade payables 13.4 14.0 19.2 10.2 12.3 12.9Other current liabilities 0.0 0.0 0.0 0.0 0.0 0.0Total Current Liabilities 14.3 16.0 21.8 13.2 15.3 15.9Total Liabilities and Shareholders Equity 25.0 30.3 49.4 57.1 64.3 76.8Net Capital Employed 9.2 10.4 15.1 15.7 24.3 36.5Net Working Capital 6.0 6.7 6.8 -0.3 -2.9 -1.2GROWTH & MARGINS 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013eSales growth 42.6% 45.4% 41.1% 34.4% 41.7% 23.8%EBITDA (adj.)* growth 107.3% 139.2% 69.8% 76.3% 43.3% 24.5%EBITA (adj.)* growth 255.7% 190.0% 74.2% 67.7% 43.8% 19.1%EBIT (adj)*growth 529.6% 184.0% 74.6% 51.9% 77.2% 21.4% Page 19
  20. 20. Gowex Gowex: Summary tables GROWTH & MARGINS 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013e Net Profit growth +chg 197.5% 78.4% 40.7% 76.8% 18.1% EPS adj. growth +chg 197.5% 51.8% 25.3% 76.8% 18.1% DPS adj. growth +chg -11.0% 91.4% 17.0% EBITDA (adj)* margin 9.5% 15.7% 18.9% 24.8% 25.1% 25.2% EBITA (adj)* margin 6.4% 12.7% 15.7% 19.6% 19.9% 19.2% EBIT (adj)* margin 5.2% 10.2% 12.6% 14.2% 17.8% 17.5% RATIOS 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013e Net Debt/Equity -0.1 -0.2 -0.4 -0.6 -0.4 -0.3 Net Debt/EBITDA -0.3 -0.5 -1.0 -1.3 -0.8 -0.6 Interest cover (EBITDA/Fin.interest) nm 68.9 nm nm nm nm Capex/D&A 132.1% 83.2% 185.4% 152.0% 235.1% 194.5% Capex/Sales 5.7% 4.6% 11.6% 16.0% 17.0% 15.0% NWC/Sales 24.9% 19.0% 13.7% -0.5% -3.1% -1.0% ROE (average) 12.7% 26.1% 29.0% 24.9% 30.7% 27.2% ROCE (adj.) 9.8% 24.4% 30.0% 44.5% 49.9% 39.9% WACC 14.5% 14.5% 14.5% 14.5% 14.5% 14.5% ROCE (adj.)/WACC 0.7 1.7 2.1 3.1 3.4 2.8 PER SHARE DATA (EUR)*** 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013e Average diluted number of shares 9.8 9.8 11.5 12.9 12.9 12.9 EPS (reported) 0.10 0.29 0.45 0.56 0.99 1.17 EPS (adj.) 0.10 0.29 0.45 0.56 0.99 1.17 BVPS 0.97 1.28 1.99 2.72 3.70 4.86 DPS 0.00 0.00 0.09 0.08 0.15 0.17 VALUATION 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013e EV/Sales 0.6 0.6 0.6 0.5 EV/EBITDA 3.1 2.4 2.5 2.0 EV/EBITDA (adj.)* 3.1 2.4 2.5 2.0 EV/EBITA 3.8 3.0 3.1 2.7 EV/EBITA (adj.)* 3.8 3.0 3.1 2.7 EV/EBIT 4.7 4.2 3.5 2.9 EV/EBIT (adj.)* 4.7 4.2 3.5 2.9 P/E (adj.) 7.5 8.6 6.1 5.2 P/BV 1.7 1.8 1.6 1.2 Total Yield Ratio -2.6% -2.5% -2.9% -3.4% EV/CE 2.0 2.7 2.5 1.7 OpFCF yield -3.3% 58.8% 14.8% 21.7% OpFCF/EV -4.3% 91.3% 19.4% 28.4% Payout ratio 0.0% 0.0% 19.5% 13.8% 15.0% 14.9% Dividend yield (gross) 2.6% 1.3% 2.5% 2.9% EV AND MKT CAP (EURm) 12/2008 12/2009 12/2010 12/2011 12/2012e 12/2013e Price** (EUR) 3.35 4.79 6.01 6.01 Outstanding number of shares for main stock 9.8 9.8 11.5 12.9 12.9 12.9 Total Market Cap 39 62 78 78 Net Debt -1 -3 -9 -22 -18 -18 o/w Cash & Marketable Securities (-) -2 -6 -15 -31 -28 -27 o/w Gross Debt (+) 2 3 6 9 9 9 Other EV components 0 0 0 0 0 0 Enterprise Value (EV adj.) 29 40 59 60 Source: Company, Bankia Bolsa estimates. Notes * Where EBITDA (adj.) or EBITA (adj)= EBITDA (or EBITA) -/+ Non Recurrent Expenses/Income and where EBIT (adj)= EBIT-/+ Non Recurrent Expenses/Income - PPA amortisation **Price (in local currency): Fiscal year end price for Historical Years and Current Price for current and forecasted yearsSector: Telecommunications/TelecommunicationsCompany Description: Gowex operates within the telecommunication sector, occupying a unique position as a neutral infrastructuremanager and interconnection services company for operators. Gowex was founded in 1999 and currently focuses on 2 main activities:1) Gowex Wireless (main growth driver): services related to wireless telecommunications: management and operation of WiFi networks,wireless roaming platform 2) Gowex Telecom (traditional activity): bandwith trading and B2B telecoms market services. Page 20

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