Pareteum Chairman Letter

April 18, 2017

Dear Fellow Shareholder,

As we move into the Spring, a season I associate with renaissance and the optimism of new beginnings, I wanted to write to you and share my perspectives on the business here at Pareteum. I hold on to my optimism as I see the transformational change that has been brought to the company with all of our new recruits, the sheer size and scale of the opportunity ahead of us, and the hunger of the team we have built to convert that potential into revenue.

Please consider this letter to be the first in a series of updates that we will do to demonstrate our commitment to improving our communications with you, both in frequency and in content, particularly between the Quarterly filings and earnings calls.

I have spoken in the past about the growth in this sector and every day we see new announcements of the world gearing up for the connected universe and Internet of Things. Markets are typically based on future value and it is my view, and a view shared by the entire team, that the inherent value of our company is not being accurately reflected in the market. As you read this letter, please understand that our entire executive team and all of our employees view what has been accomplished since November 2015 as remarkable and fundamentally transformative. That is why the market’s lack of recognition is even more disappointing to all of us. I can assure you, however, we are working to change this situation and instill that optimism to our team, the market and customers.

We joined the company in a difficult time because we recognized the size of the market, the advantage of its technology, and the opportunity to unlock the value for stakeholders.

I continue to hold on to that optimism as I see the results that we are now starting to deliver, and the transformational change that has been brought to the company since I joined seventeen months ago.

Achievements
When I speak of transformational changes, I am not talking about vague concepts or hypotheticals but real, concrete, changes. The path to value creation is moving forward with clarity and due urgency. This is underscored by our recent business highlights:

• We ended 2016 by fundamentally completing the restructuring of the business, slashing our costs and dramatically improving revenue-per-employee efficiency;
• We entered 2017 with significant momentum behind us, in terms of customer and partner additions, the successful restructure of our senior secured debt and the appointment of new sales talent and a new Board member, developments which were positively received by the investment community;
• We enhanced our software technology, enabling new capabilities for our Managed Services Platform adding support for broadband (4G) services. These are tangible developments which can now be included in the sales activities for non-Vodafone customers and will certainly help drive new revenues as we close more deals;
• We recruited industry leaders: Vic Bozzo as CEO; Ted O’Donnell as CFO; Rob Mumby from Twilio as SVP Worldwide sales; and Chris Hills from Verizon as SVP Global Connectivity;
• We appointed Luis Jimenez-Tuñon, former CEO of Vodafone Enabler Spain, to our Board;
• We signed a major new contract for broadband services with our biggest customer, Vodafone;
• We migrated our managed services platform to the cloud; and,
• We signed-up Pronto and Sol Mobile as our first Global Mobility Cloud customers…the first of many to come!

I addressed some of these matters in our Town Hall conference call, see HERE. We remain vigilant in managing cash, reducing our outstanding debt and solidifying our balance sheet, all efforts that we believe will have a positive impact on the value of the business and growth of the company in line with the industry.

Communications
You have asked for more feedback, and more communication. We hear you, and we promise to deliver on this too.

We will do this through our new communications strategy, which will involve regular updates like this letter, additional social media activity as well as the traditional press releases, filings and the annual shareholder meeting.

We also intend to hire a senior marketing and communications executive to ensure we follow-through on this promise, and to help us evangelize what we already believe: that the world is moving quickly, towards a bright future where all things are connected, and where Pareteum is at the epicenter of this connectivity.

Commercial Update
Looking ahead in 2017, we have given guidance that we will increase our revenues over the last quarter of 2016. We remain confident of achieving that but we want to do so much more.

We are already bidding on multiple major blue-chip opportunities, and we are shortlisted against some of the large system integrators in the industry. This signals that we are here to stay, and that our technology competes against the very best there is.

By the end of the year, on the customer side, we expect to have signed binding, long-term contracts with one or more additional major MVNE customers, which we believe will add significant, material, additional deferred contract revenues. We also expect to on-board new companies or brands onto our growing Global Mobility Cloud.

We continue to expand our need for strategic partnerships and will focus on groups that provide more value and more revenue to our customers, thereby creating new revenue for Pareteum.

Finance, Sales & Value
Our total expected revenues, from our current contracted customer base, is worth approximately $40 million. This is revenue that will be paid to Pareteum as it continues to deliver services to our existing customers over the course of the next three to five years.

Our sales pipeline shows total potential contract value (based on 3 and 5 year agreements) of approximately double the revenue run rates that underpin our current customer agreements. We will do everything that our years of successful professional experiences tell us will help assure that we achieve our aims. I also encourage you to track the brands that are coming to rely on Pareteum to deliver connectivity. We are proud to call Vodafone our largest customer; it is the second largest mobile network operator in the world. We also count ZAIN as a valued customer, one of the largest network operators in the Middle East, a significant growing market where Vic, Rob and the sales team are busy pursuing other significant market opportunities.

I wish to make some further observations about our earnings and our value/valuation. It is self-evident that value enablement and creation comes before earnings. That bears repeating: first we must create the value, then we the shareholders – and we are shareholders ourselves – may reap the rewards.

Looking forward
We have now built, and continue to build on, the foundation which is needed to create value. We are focused on continued process and financial improvements to right-size the business; we are constantly balancing costs with revenues; we have upgraded the platform for our current customers and future Mobility Cloud customers; and we have continued to develop our market-leading software. We have a roadmap for our technology that is as ambitious for the global communications market as Google’s was for Search. We are busy and laser-focused on making our philosophy come true: all things connected, through Pareteum.

It should be noted that we are communications technologists, and that it is incumbent upon us to explain to our investor community as well as all types of new investors in simple, non-technical language, what exactly it is that we do. We have had many colorful discussions about how to explain what we do, which is provide software (as a service) to any organization that wants or needs to manage subscribers (including SIM cards) or Internet-of-Things (IoT) devices. We provide these software as a service solutions, to the communications service providers and enterprises businesses of the world with our three complementary platform solutions:

(1) the Managed Services Platform (i.e., serving customers such as Vodafone);
(2) the Cloud Mobility Platform (i.e., serving customers such as Sol Mobile); and,
(3) the App Exchange and Development Platform (i.e., serving customers such as Pronto Telecom)

As the world becomes more connected, it will not only be mobile network carriers such as Vodafone or ZAIN that need technology like ours. All kinds of business will desire the ability to control and leverage the communication abilities of their assets, their employees, their production lines, etc. Fleets of vehicles or delivery drones will all need centralized management and connectivity. We enable this kind of connectivity. We also help our customers derive value from the data which underpins these communications.

If a network carrier wants to offer its subscribers unlimited Facebook or WhatsApp data, our platform enables that. If a business wants to issue all of its executives with multi-SIM phone accounts and global worldwide roaming arrangements, through our network of partners, we’ve built that. If an automotive manufacturer wants its cars to ‘phone home’ with diagnostic information, or provide live accident monitoring, we can enable that.

Analogies we use to describe ourselves including being to commercial communications what Dropbox is to computer files. We refer to the ‘Uberization’ of communications; facilitating businesses when they decide to make the next obvious leap, the use of communications tools and data as core strategic assets. This is already happening and we are in position to deliver the required solution.

Our commitment to our investors is that we will regularly communicate with you throughout the course of the quarter, not just around material press announcements such as quarterly earnings and contract awards. Through letters such as this, we can expand upon the “news” while providing additional insights sourced from our team and even provide answers to investor questions we receive at investors@pareteum.com.

As Executive Chairman of your company, and a shareholder, I am giving you my personal pledge that the entire management team and Board of Directors are operating with a real sense of urgency to execute and to deliver. We expect to have much to share with you in the near future and that as we open the lines of communication with all of our stakeholders, we will be able to unlock the unrecognized value inherent in our business.

Finally, I was reminded recently of a quote attributed to Warren Buffett:

“The most common cause of low prices is pessimism—some times pervasive, some times specific to a company or industry. We want to do business in such an environment, not because we like pessimism but because we like the prices it produces.”

As I said at the outset, and for the many reasons given, I remain highly optimistic about Pareteum.

All good wishes to you our shareholders,

Robert H. Turner
Executive Chairman & Principal Executive Officer
Pareteum Corporation (NYSE MKT : TEUM)