Spirit Telecom : 2017-04-28 ST1 March 2017 Quarterly Activities and Cashflow Reports 2017-03-23 ST1 Spirit completes integration of Phone Names Marketing

28th April 2017

QUARTERLY ACTIVITIES REPORT AND APPENDIX 4C FOR QUARTER ENDED 31 MARCH 2017

ASX Symbol: ST1 REGISTERED OFFICE Level 4, 100 Albert Road South Melbourne VIC AUS 3205 PRINCIPAL PLACE OF BUSINESS Level 2 240 Chapel Street Prahran VIC AUS 3181 CONTACT P 1300 007 001 F 1300 887 813 www.spirit.com.au BOARD OF DIRECTORS Mr James Joughin (Chairman) Mr Terry Gray (Director) Mr Geoff Neate (Managing Director) ISSUED CAPITAL Fully paid ordinary shares: 184,050,420 ST1O Listed Options: 44,654,523 ST1AC Unlisted Options: 2,500,000 ST1AB Performance Rights: 2,570,000

Spirit is pleased to provide its Quarterly Activity report to our shareholders. Highlights: Receipts from customers increases 12% over the December quarter, to $3,355,000 Net cash from operating activities increased 90% for the quarter, to $101,000 Total Buildings connected to Spirit's network increased by 58, for the YTD total of 118 buildings. This brings Spirit's total on-network ("on-net") buildings to 306. Debt paydown of $210,000 off the principle Bank debt facility Closing cash balance for the quarter was $1.07 Million Growing Spirit's network through the addition of buildings in the residential and commercial sectors Increasing the customer numbers within its on-net buildings Developing the sales and marketing resource, to enable a faster path to growing customer numbers Working with building owners to increase the number of connected apartments, for future growth and deployment. Spirit Telecom Limited (ASX: ST1) ("Spirit") is pleased to provide shareholders with the 3rd quarterly activities report and Appendix 4C for the quarter ended 31 March 2017. During the quarter, Spirit's activities were focused on developing key strategic areas, considered important for Spirit's growth and development. These include:

Spirit is pleased with the growth of on-net buildings to 306. The deployment of 58 buildings, more than double that of Q1/17, shows the continued appetite the market has for Spirit's superfast Internet and voice services. The Capex used in these buildings, for the quarter is $545K, or an average of

$9,396/building. The financial year to date in- building capex spend is $1.27 million or

$10,846/building, across the 118 buildings added this financial year.

20000

18,100
	16,930
		15,280
660
	1,222	702
3247
		2877
	2335

18000

$1,400,000

$1,000,000	214	250
$800,000	200
$600,000	150
$400,000	58	100

$1,200,000

$200,000

$-

248

2634

Q1 Q2 Q3

Total Capex Spend Buildings added per quarter Total Buildings

306

350

300

50

0

16000

14000

12000

10000

In the residential sector the number of connected apartments grew to 18,100 for the March quarter. Active customers within the residential and student apartments grew to 3,907, which is a growth of 9% over the December quarter.

8000

6000

4000

2000

One of the more significant buildings was the addition of the Eureka Tower in Melbourne. Spirit entered the building more than a year after NBN and regardless of the 'first to market advantage' that NBN had, Spirit was able to gain nearly 20% of residents since activating Eureka Tower in late February 2017.

0

Q1 Q2 Q3

Residential Student Total Connected Apartments

Spirit's Managing Director Geoff Neate commented:

"This quarter's growth in buildings and Connected apartments has been encouraging. It shows what we are capable of and is a credit to the team's ability to compete against much bigger players in the industry. Our biggest test was to give NBN such a head start and we exceeded our expectations in a very short time"

The overall growth of Spirit has been healthy, with revenues increasing in all categories. As is illustrated in the chart below, the growth in building revenue, relative to total, is continuing to increase. In addition, non-building revenue has grown, providing an overall healthy increase in total revenue.

$3,500,000

$3,000,000

$2,500,000

$2,000,000

$1,500,000

$1,000,000

56% 58% 62%

$500,000

$-

FY17/Q1 FY17/Q2 FY17/Q3*

Building Revenue Total Revenue

Factors affecting Australian Telco sector

• Gross margin reduction experienced by NBN resellers, brought about by the NBN's pricing structure:

  Spirit deploys and manages a totally separate network to the NBN. Because Spirit deploys 'switched Ethernet' in its buildings it does not resell NBN and is therefore does not experience the same negative margin impact being experienced by NBN resellers (see below).

• Competitor's plan to build an alternative mobile network

  Spirit's network development is focused on providing superfast internet and ancillary services, such as voice, to the commercial and residential sector. The entry of another mobile network is not expected to impair Spirit from achieving its growth objectives.

  A single end user on a 25/5Mbps NBN service requires a $27 access fee and $15.25 of CVC2, compared to Spirit's less than $10 for 25/25Mbps

• Based on a 25/5 Mbps service

• Based on industry average of 1Mbps/user

Appendix 4C Quarterly report for entities subject to Listing Rule 4.7B Appendix 4C

+Rule 4.7B

Quarterly report for entities subject to Listing Rule 4.7B

Introduced 31/03/00 Amended 30/09/01, 24/10/05, 17/12/10, 01/09/16

Name of entity

Spirit Telecom Limited

ABN Quarter ended ("current quarter")

73 089 224 402

31 March 2017

Consolidated statement of cash flows	Current quarter $A'000	Year to Date (9 Months) $A'000
Cash flows from operating activities Receipts from customers Payments for research and development product manufacturing and operating costs advertising and marketing leased assets staff costs administration and corporate costs Dividends received (see note 3) Interest received Interest and other costs of finance paid Income taxes paid+ Government grants and tax incentives Other (provide details if material) 1.9 Net cash from / (used in) operating activities	3,355	9,042
	-	-
	-	-
	(81)	(244)
	(659)	(1,715)
	(2,419)	(6,639)
	-	-
	2	16
	(58)	(126)
	(39)	(72)
	-	-
	-	-
	101	262

+ A reclassification has been made between the Year to Date income taxes paid and administration costs in relation to

$33,000 of income taxes paid in the December 2016 quarter.

1. Cash flows from investing activities

2. Payments to acquire:

3. property, plant and equipment

   (545) (1,269)

4. businesses (see item 10) - (4,400)

5. + See chapter 19 for defined terms

   1 September 2016