Ikanos Communications

(NASDAQ: IKAN) January 16, 2013

Proprietary & Confidential

SAFE HARBOR STATEMENT

This presentation contains, in addition to historical information, forward-looking statements. Such forward-looking statements are based on managements current expectations, estimates and projections about our industry and business, including but not limited to the expected growth of and opportunities in the broadband market, the companys position in the market, any statements about historical results that may suggest trends for our business, any statements of the plans, strategies, and objectives of management for future operations or products, any statements of expectation or belief regarding the performance of our technology or products, customer demand and future technology developments, any statements of assumptions underlying any of the foregoing, management's beliefs, and certain assumptions, all of which are subject to change. Forward-looking statements can often be identified by words such as "anticipates," "expects," "intends," "plans," "predicts," "believes," "seeks," "estimates," "may," "will," "should," "would," "could," "potential," "continue," "ongoing," similar expressions, and variations or negatives of these words. These forward-looking statements are not guarantees of future results and are subject to risks, uncertainties and assumptions that could cause our actual results to differ materially and adversely from those expressed in any forward-looking statement. For a further discussion of the risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see the Companys periodic filings on Forms 10-K and 10-Q, as well as other reports the Company files from time-to-time with the Securities and Exchange Commission. For the most current detailed risk factors, please review our Form 10-Q for the period ended September 30, 2012. The Company cannot assure that the events and circumstances reflected in any forwardlooking statements will be achieved or occur, nor does the Company undertake any obligation to update any forwardlooking or other statements for any reason after the date of this presentation. Ikanos Communications, Inc. All rights reserved. Ikanos, NodeScale are among the trademarks owned by Ikanos Communications, Inc. Any other trademarks or trade names mentioned are the property of the respective owners.

IKANOS AT A GLANCE
Advanced Broadband Semiconductor and Software Provider
Founded: 1999 Public: 2005 Employees: 265 Customers: France Telecom, NTT, AT&T Sagemcom, Sumitomo, NEC, AVM ZTE, ALU Offices: Headquarters - Fremont, CA R&D - Red Bank, NJ; Bangalore, India Sales China, Taiwan, Korea, Japan UK, France, Germany Recent Developments: Showcased new Velocity-3 system for carriers at Broadband World Forum in Oct. 2012 Market: NASDAQ: IKAN Price: $1.76/share (01/11/13) Market Cap: $123M Shares Outstanding: 70M Debt: $5.0M Cash & Equivlents: $33.4M (09/30/12) Volume: 105K shares/day Revenue: 2011 - $136.6M 2012 9 mo. - $94M

INVESTMENT HIGHLIGHTS
Delivering Broadband Speeds Comparable to Fiber Over Telcos Existing Copper Lines Technology Leadership
Launching NodeScale Vectoring System To Deliver 200 Mbps Over Copper Greater than twice the speed or twice the reach of current deployments

Global Footprint
400 Million Ports Shipped Worldwide

Enabling Explosive Growth in Data and Video, Cloud

High Bandwidth to/from Home over existing infrastructure

Solid Balance Sheet

NEW IKANOS TECHNOLOGY WILL DELIVER FIBER SPEEDS AT 1/10TH THE COST
Fiber to the Home $2,500 / household 5+ years to deploy
Fiber

Node

vs.
Copper

Central Office

Fiber

Node

Fiber to the Neighborhood + Copper to the Home

$250 / household Deployment over existing infrastructure

Source: BusinessWeek article on FTTH in USA and OECD presentation a major US carrier on FTTN

TELCO MARKET OPPORTUNITY

Broadband Line Market Shares - Q1 2012

2% 2%

Cable 19% 3%
FTTH

Telcos (i.e., ADSL, FTTx and FTTH) have majority share in broadband lines >77% of Total Broadband Existing copper is Telcos major asset Vectored VDSL will provide a significant opportunity to deliver broadband over copper to meet customer demands

DSL

FTTx

14%

60%

DSL FTTH Satellite/mobile

FTTx (Incl. VDSL, FTTx+Lan etc) Cable Other

Source: Point Topic Global Broadband Statistics Q1 2012

GROWTH DRIVERS THROUGH TELCOS

Telcos are searching for:
New revenue streams Higher ARPU Lower CAPEX

Subscribers demanding higher speed Internet access:

More video content Higher video resolution

New services and applications:

Cloud services creating a need for higher upstream data rates

Telcos experiencing competition from other broadband providers:

Mobile Cable Satellite

GENERIC TELCO CASE STUDY

Telcos are under pressure from Cable TV operators to increase data rates and subscriber coverage. Data rates for single line broadband access:
Today - 32 Mbps max Announced - 75 Mbps (with vectoring) Desired - 100 Mbps Ikanos NSV can provide 150 Mbps!

Subscriber coverage: 55% today; 95% with Ikanos NSV! Ikanos NSV will help Telcos to compete with Cable TV operators, plus enables Telcos to generate more revenue with lower OpEx

Broadband Evolution

smart + multiscreen + ultra HD TV streaming video/audio

video conferencing
iptv online gaming music

social & sharing

cloud services WWW

e-mail web voice

TR-069

managed services & smart home

10 Mbps
VDSL DOCSIS 3.0 PON G.Vector Bonding DOCSIS 3.1 GPON G.fast xPON

ADSL DOCSIS 2.0

LEVERAGE WORLDWIDE FOOTPRINT 400 M PORTS

New Vectored VDSL Technology Creates Significant Upgrade Opportunities For Copper Networks

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IKANOS ENABLING IPTV DEPLOYMENTS WORLDWIDE

Major OEMs
Taiwan ODMs

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IKANOS MARKET OPPORTUNITY

Existing Copper Line Creates Significant Opportunity For Upgrade
Millions 120

Projected Vectored VDSL deployment (lines)

100
~$1.8B

80
~$1.5B

60

Total Opportunity = Over 1 Billion Copper Lines

40
~$800M

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Note: Total opportunity includes all Broadband technologies over copper

0 2013 2014 2015 2016 2017

Source: Projections based on Ikanos analysis of over 50 Incumbent Carrier copper line data Carrier copper lines data from Dataxis Q2 2012 world wide statistics

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How Ikanos Delivers High-Speed Broadband Over Copper

WHERE IKANOS PRODUCTS FIT

Online Games Services

Music and Media Library

Video Streams Photos and Docs

Storage & Backup

Ikanos Solutions for Broadband over Copper enable high-speed access to the Digital Home

Copper Fiber
FTTx

Ikanos Gateway for Digital Home

Entryway for triple-play content

Ikanos delivers end-to-end Broadband Access solutions

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IKANOS NodeScale VECTORING SOLUTION IS HERE

Ikanos Vectored Transceivers

Ikanos Vectoring Processor

Ikanos Gateway
Vectoring-Compliant Communications Processors
Infrastructure Segment Gateway Segment

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FTTx System TESTING WITH TELCOS NOW

Chassis/ Backplane

To Backplane
(Controller Card and Vector Card)

Line Card
16 port slice

Vector Card
96 port VCE

16 port DSP
16 port slice

8Port AFE

8Port AFE

96 port VCE

16 port slice

Ikanos provides >75% of silicon content on the line card

Ikanos provides >95% of silicon content on the vector card

Note: 192 line FTTx system shown above

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IKANOS GATEWAY PRODUCT FOR THE HOME

Ikanos is a major supplier of broadband access gateway processors for the home:
Media Agnostic Gateway

Ikanos is well positioned to address the evolution of the digital home, leveraging:
Core competencies Strong partnerships Embedded base of legacy CPE

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Ikanos Operating Focus and Financials

IKANOS OPERATING FOCUS

Near-term Now Through 1H2013
Product Launch Customer Testing Design-win Pipeline and Ramp

Mid-term 2H2013
Go-to-Market
Profitability New Product Roadmap

Longer-term 2013 & Beyond

Technology Leadership
Expanding TAM Sustainable Execution

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INCOME STATEMENT TRENDS NON-GAAP

Q4 -11 Actual Revenue Gross Prot OPEX Net Income (Loss) EPS (Loss) Shares Outstanding $35M $20M $18M $1M $0.01 69M

Q1 -12 Actual $31M $16M $20M $(4)M $(0.05) 69M

Q2 -12 Actual $32M $15M $17M $(3)M $(0.04) 70M

Q3 -12 Actual $31M $15M $20M $(5)M $(0.07) 70M

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REVENUE BY PRODUCT GROUP

Product Group Representative Products Mix1

Infrastructure Products

ADSL2+ and VDSL2 SHDSL

37%

Gateway Products

ADSL2+ and VDSL2 SHDSL Triple-play Gateway Managed Gateway (Non-DSL)

63%

1 Approximate Trailing 12 Months Orders contribution; Excludes professional services.

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Quarterly R&D & SG&A Spending vs. Revenue ($M)

Long-term Commitment to R&D and Customers
$40.0 $35.0 Rev $M $30.0 $25.0 $20.0 $4.1 $15.0 $10.0 $13.6 $5.0 $- Q3 2011 Q4 2011 R&D $ Q1 2012 SG&A $ Rev $ Q2 2012 Q3 2012 $12.7 $13.4 $16.1 $12.5 $5.2 $4.7 $4.4 $4.4

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Ikanos Communications, Inc. All rights reserved.

Resources and Positioning For Growth

Strong Balance Sheet
Cash and Investments Accounts Receivable Inventory Total Assets Bank Line of Credit Total LiabiliZes Q4 2011 Actual $35M $18M $9M $78M -- $17M Q1 2012 Actual $40M $17M $8M $78M -- $20M Q2 2012 Actual $33M $21M $7M $79M -- $23M Q3 2012 Actual $33M $20M $6M $80M $5M $30M

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Ikanos Communications, Inc. All rights reserved.

Long Term Non-GAAP Financial Model

2010
Gross Margin Research & Development Sales, General & Administrative Total Operating Expenses Operating Income 37% 31% 12% 43% (5%)

2011
53% 39% 15% 54% (2%)

Q3 2012
48% 51% 13% 64% (16%)

Long-Term
55% 60% 20-25% 12% 35% 18% 28%

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Ikanos Communications, Inc. All rights reserved.

INVESTMENT SUMMARY
Leading Provider In Large Growth Market Leading Technology and Products Customer Footprint Creates Significant Upgrade Opportunity Telcos Driving Adoption Rich in IP: 400+ Patents and Patent Applications Solid Balance Sheet

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Ikanos Communications
(NASDAQ: IKAN)

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Proprietary & Confidential