ANNUAL MEETING - JUNE 2018 1 Safe Harbor Statement Forward-Looking - - PowerPoint PPT Presentation

ANNUAL MEETING - JUNE 2018

1

Safe Harbor Statement

Forward-Looking Statements We have included in this presentation certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on management's beliefs as well as on a number of assumptions concerning future events made using information currently available to management. You are cautioned not to put undue reliance on such forward-looking statements, which are not a guarantee of performance and are subject to a number of risks, uncertainties and other factors, many of which are outside Alaska Communications' control. For further information regarding risks and uncertainties associated with Alaska Communications' business, please refer to the Alaska Communications’ SEC filings, including, but not limited to, our annual report on Form 10-K, quarterly reports on Form 10-Q filed subsequently, and other filings with the SEC, included under headings such as “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Non-GAAP Measures In an effort to provide investors with additional information regarding our financial results, in particular with regards to our liquidity and capital resources, we have disclosed certain non-GAAP financial information such as Adjusted EBITDA, Adjusted Free Cash Flow and Net Debt, which management utilizes to assess performance and believes provides useful information to investors. The definition of these non- GAAP measures are contained in our quarterly earnings press releases. Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP measures and should not be considered a substitute for Net Income, Net Cash Provided (Used) By Operating Activities and other measures of financial performance recorded in accordance with GAAP. Reconciliations of our non-GAAP measures to our nearest GAAP measures can be found in our earnings releases or on our website at http://www.alsk.com in the investment data section. Other companies may not calculate non-GAAP measures in the same manner as Alaska Communications. We do not provide guidance for Net Income and Net Cash Provided (Used) By Operating Activities. 2

Company Overview and Milestones

The Juneau and Douglas Telephone Company begins

• perations

Anchorage Telephone Utility begins operations Telephone Utilities

• f the Northland

begins operations Alaska Communications is formed by combining 3 RLECs to become first statewide telecom company Alaska Communications completes its initial public offering Acquires the Northstar submarine cable, and builds AKORN, providing Alaska diverse submarine routes to the Lower 48 Launches the Alaska Wireless Network (AWN) joint venture with GCI to better compete in wireless sector Sells its interest in the Alaska Wireless Network to GCI, pays down debt with proceeds, and becomes one of the lowest-leveraged companies in the industry Acquires Fiber Network from ConocoPhillips to allow entry into Oil & Gas Industry

1893 1921 1949 … … 1998 1999 2008 2013 2015

3  125+ year operating history, Publicly traded (NASDAQ: ALSK) since 1999  ~600 employees (~25 outside AK), superb technical talent, tenured and seasoned management team  Extensive Fiber Network including significant submarine network operations capabilities  Superb record of success in Enterprise & Carrier, with emerging Mass Market success  Track record of gaining market share based on technology and service differentiation

ALSK’s Focused Company Strategy Foundation of Strong Broadband Growth Supports Continued Performance

• ALSK remains focused on executing its strategy through the following:

− Maintaining and developing Enterprise & Carrier strengths − Building new avenues of organic growth in Mass Market − Leveraging IT and Network technologies to lower costs and improve margins − Seeking accretive strategic opportunities to address scale and geographic diversification

• Outlook for North American data consumption remains robust

− Total data demand (PB per month) estimated to grow at 20% CAGR from 2016-2021 − Consumer IP traffic estimated to grow at 20% CAGR from 2016-2021 − Consumer internet video traffic estimated to grow at 24% CAGR from 2016-2021 − Business IP traffic estimated to grow at 23% CAGR from 2016-2021

• Demand drivers impacting ALSK include: Video (primarily Consumer), Gaming (primarily Consumer), Cloud

Migration (both Business and Consumer), Virtual & Augmented Reality (both Business and Consumer)

• Growth in mobile broadband demand will push high-density small cell deployments.

− North American mobile data demand est. to grow at 34% CAGR from 2016-2021 − Small cells needed to efficiently deliver content in metro markets – total small cells deployed expected to increase by almost 35x in next 10 years

• Increased fiber density in Access network to provide Gbps speeds to dense small cell deployments
• Fixed wireless provides 100+Mbps as an access technology and Gbps as a backhaul technology. Central

Offices serving as “mini-data centers” for increased CDN density

ALSK Strategy for Growth

Sources: Cisco Visual Networking Index: Forecast and Methodology, 2016–2021, ATLANTIC-ACM, SNL Kagan, and FirstNet.

Continued strength of Broadband growth remains foundation for future performance 4

Extensive Fiber Infrastructure Drives Future Growth

− Two diverse submarine routes to the Lower 48, with back- up/protection access to a third − Key fiber assets on Alaska’s North Slope supporting the oil and gas industry

Extensive Long Haul Fiber Network High Quality Fiber & Broadband Network State of Art Secure ALL IP Network

− 100G wavelengths in state backbone with diverse routes − Commencing deployment of GPON access nodes in business areas − All military bases on fiber − Hillsboro OR facility has extensive submarine fiber expertise − Juniper IP/Advanced Ethernet core – statewide 2.0 Certified Ethernet services − Widely deployed Metaswitch voice application soft-switch network − CyrusOne InternetExchange and Microsoft ExpressRoute partnerships − New partnerships enhance security for cloud computing

Recent investments in Fixed Wireless and Satellite capabilities extend network capabilities 5

For Business

IT Services Data Networking Internet Connectivity

 Private and secure connections to the cloud offered over an

advanced fiber based Ethernet network

 First and only carrier in Alaska with Carrier Ethernet 2.0 Certified

Services Voice Communications

 Secure hosted voice over internet solutions  State of art SIP trunking services provide IP voice leveraging on-

premise IP PBX implementations

 Provides voice to residential customers  Lifeline program provides access to services for only $1.00 a

month to qualified Alaskans

For Home

Unlimited Internet Home Voice

 Provides support and management of IT systems, including 24x7

proactive network monitoring

 Offers customized managed communications solutions to

businesses with data security or network optimization needs

 Provides internet connectivity to small to mid-sized businesses

and offers up to 200 Mbps with a dedicated line

 Business Internet provides reliable, high-speed Internet with no

data caps and no overage charges

 High-speed Unlimited Internet service without data caps or add-

• n fees for residential customers

 Provides a dedicated line with individual connections, to ensure

reliability

Key Services

6

17% 61% 22%

2017 Revenue Mix

Consumer Business/Wholesale Regulatory/Other

17% 47% 36%

2012 Revenue Mix

Consumer Business/Wholesale Regulatory/Other

Competitive Landscape

COMPETITIVE POSITIONING COMPETITIVE ADVANTAGES BUSINESS & WHOLESALE GROWTH COMPARISON (Y/Y)

• Strong competitive position within Alaskan market.
• Reputable track record in a competitive market
• Owns 2 of the 4 submarine cables connecting Alaska to the

Lower 48 states.

• Expansive and established fiber network focused on

Enterprise & Carrier segment, now also supporting Mass Market segment

• On-site and cloud data storage solutions.
• Comprehensive service offering designed as a one-stop shop

for Enterprise IT needs.

• Submarine cables follow diverse routes.
• Only major provider with an uncapped data offering.
• Secure connectivity and data storage through exclusive

partnerships with CyrusOne and Microsoft.

• Outstanding customer service.
• Highly trained and certified technical professionals supported

by a seasoned management team

• Culture of advancing technology as the first among

competitors to deploy Ethernet MPLS, VoIP, and more.

Technology and Service provide differentiation Growth driven by share gain in broadband and increased wallet share of business IT spend 7

Diverse Customer Verticals

STRATEGIC COMMERCIAL HEALTHCARE / EDUCATION STATE / LOCAL OIL & GAS

Kodiak Area Native Assoc.

CARRIER / FED SMB 8

Select Partnerships

• Managed Security:

‒ Watchguard IT: Gold Partner

• Communications:

‒ Avaya: Silver Partner

• IT Infrastructure:

‒ Microsoft: Gold Partner, Small Mid-Market Solutions, Data Center Silver Partner ‒ Barracuda: Storage MSP Partner

• Cloud:

‒ Microsoft: Silver Partner, Small Mid-Market Cloud Solutions, Azure ExpressRoute Partner ‒ CyrusOne: IX (Internet Exchange) Connection

Next Generation Products

• First SIP product implementation in Alaska:

‒ All major metro markets in Alaska ‒ Based on QoS Enabled, Secure, MEF Certified IP Network

• Hosted Voice over Internet:

‒ All major metro markets in Alaska ‒ Upgraded to High Definition Voice ‒ With Unified Communications for Collaboration

• Managed Networks:

‒ Proactive management of Enterprise Class networks ‒ Customer Portal capabilities

Growing Roster of Partners & Innovative Managed Services

Partnerships with blue-chip companies and access to the latest products allows Alaska to deliver best-in-class customer experiences 9

Growth Drivers & Differentiation

10

Grow with the market Take Share Expand wallet share Technology leadership Customer Service Solution Orientation Speed & Reliability Convenience & Instancy Value

Mass Market Value Proposition Enterprise & Carrier Value Proposition

Growth Drivers

Historical Financials

WIRELINE REVENUE WIRELINE CAPEX1 ADJUSTED EBITDA TOTAL NET DEBT / LEVERAGE

1 2015 excludes the $5.3mm ConocoPhillips fiber purchase

11

$201 $199 $215 $220 $227

Sale of Wireless

• perations

Sale of Wireless

• perations

$227

Alaska Economy Enterprise & Carrier  Overall improvement  Strengthening Oil and Gas industry  Increasing service demand from businesses  Fiber-fed WiFi and Fixed Wireless creating market opportunity and performance  CAF II planning and implementation underway and performing to plan

Looking Ahead

Sources: Cisco Visual Networking Index: Forecast and Methodology, 2016–2021, ATLANTIC-ACM, SNL Kagan, and FirstNet.

Enterprise & Carrier will drive growth with Mass Market providing additional impetus 12 Mass Market  Solid sales funnel and results support future growth  Turning up customers in the Arctic markets, including large school district wins  Capturing 5G network growth with small cell backhaul services  Federal opportunities are significant  Mitigating Rural Health Care impacts  Fiber expansion in Arctic markets – deployed metro fiber in Nome and Utqiaġvik (Barrow)  Fiber-fed WiFi / Fixed Wireless deployments well underway  Expanding Satellite deployment  Strengthening online capabilities Technology Capabilities

Business Plan Drives Shareholder Value

Enterprise & Carrier and Mass Market segmentation focus drives top-line growth and Adj. EBITDA/FCF performance

Investments in advanced hybrid fiber / fixed-wireless network combined with IT systems drives scalable operating model Explore strategic actions to drive scale and diversification Operating Performance Technology Innovation Strategic Actions

13