Investo In estor Day r Day and and 20 2013 13 Outl Outloo ook - - PowerPoint PPT Presentation

In Investo estor Day r Day and

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20 2013 13 Outl Outloo

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k Even ent

Febr bruar uary 14, 14, 2013 2013

Senior leadership team

Safe harbour notice

This presentation contains certain forward-looking information. Material factors or assumptions were applied in drawing conclusions or making a forecast or projection reflected in such forward information. Actual results may differ materially from a conclusion, forecast or projection in such forward-looking

• information. Therefore, forward-looking statements should be

considered carefully and undue reliance should not be placed

• n them.

Additional information about such material factors and assumptions can be found in MTS Allstream’s filings with Canadian securities regulatory authorities. Except as required by law, MTS Allstream disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Wayne ayne Demk emkey ey Chief Financial Officer, MTS Allstream

MTS Allstream 2012 summary

Continued to:

• Deliver steady improvements
• Follow our strategic objectives
• Produce consistent results

Financial scorecard

All 2012 outlook targets met.

    

MTS - solid revenue growth

Wireless data revenues, up 29.7% ($ millions) 2012 $116 2011 $90 Internet revenues, up 8.4% ($ millions) 2012 $110 2011 $102 IPTV revenues, up 11.2% ($ millions) 2012 $79 2011 $71

Revenues EBITDA EBITDA margin

$980.6 million, up 0.4% $405.5 million, up 1.1% 50.5%, up 0.3 points

60% 40%

2012 revenue mix

Allstream strategic growth

Converged IP revenues, up 1.6% ($ millions) 2012 $244 2011 $240 EBITDA, up 6.3% ($ millions) 2012 $115 2011 $109 Gross margin (percent) 2012 59.5% 2011 55.3%

Revenues EBITDA Gross margin

$758 million, down 8.2% $115 million, up 6.3% 59.5%, up 4.2 points

58% 42%

2012 revenue mix

2013 Outlook

2013 outlook

Revenues

$1.704B $1.630 to 1.730B

EBITDA

$585M* $590 to $630M

Earnings per share

$2.19* $1.75 to $2.15

Free cash flow

$118M $160 to $200M

Capital expenditures

19.8% of revenues 17 to 19% of revenues

2013 outlook 2012 results

Significant improvement expected in 2013 free cash flow

Revenues

MTS Allstream (in billions $) 2012 $1.704 2011 $1.766 2013E $1.630 to $1.730 2012 $981 2011 $976 2013E MTS (in millions $) 2012 $758 2011 $826 2013E Allstream (in millions $)

EBITDA – 2013 increase

2012 2013E $585M* $590 - $630M

Cost reductions

2012 $33.6 2011 $28.8

2013E $30 to $40

EPS

2012 2013E $2.19* $1.75 - $2.15

2012 19.8% of revenues 2011 16.3% of revenues $338M $288M

Capital expenditures

2013E 17 to 19%

• f revenues

2012 2013E $118M* $160 - $200M

Free cash flow – 2013 increase

Unique tax asset

$300M

• Tax asset worth $4.48 per share (December 31, 2012)
• No expectation to pay cash taxes till at least 2019

estimated NPV of tax asset

Pension funding

• We have prefunded $70 million into the MTS pension plan

using existing borrowing facilities

• Allstream pension funding for 2013 using letters of credit
• The outcome of the strategic review may inform us further

regarding our options for funding the pension requirements in the longer term

Our path forward

Pier Pierre e Blouin louin Chief Executive Officer, MTS Allstream

Strategic review – ongoing

2012 – A busy year with results

Financial highlights

2012 2011 Y/Y

Revenues − MTS 980.6 976.3 0.4% − Allstream 758.2 825.7 (8.2%) EBITDA − MTS 495.5 490.1 1.1% − Allstream 115.3 108.5 6.3% Adjusted earnings per share $2.63 $2.55 3.1% Free cash flow 117.6 129.8 (9.4%) Annualized cost reductions 33.6 28.8 16.7% Total shareholder return 15.08% 9.94% N/A

MTS subscribers (#)

Wireless 497,367 496,432 0.2% High-speed Internet 193,690 189,366 2.3% IPTV 97,232 95,476 1.8% Home phone 289,915 311,046 (6.8%)

Allstream ($)

IPC sales wins (average MRR) 572,000 494,000 15.8%

MTS – How are we making progress?

Wireless customers and ARPU

IPTV customers and ARPU

$41.65, up 8.9%

High-speed Internet customers and ARPU

• ARPU growth in all

strategic product lines

• First and only

provider to offer LTE in Manitoba

• FTTH expanded to

11 communities

• Large network

investments completed

MTS – How are we making progress?

2013E 2012 2011 2010

85,000 89,000 96,500

• Delivering highest

EBITDA margin in Canada at 50.5%

• Unique and flexible

bundles

• Very low churn and

higher ARPU

• Mostly in four-service

bundles

Bundled customers

Allstream – How are we making progress?

• 40% growth in fibre-

connected buildings with installation costs down 30%

• ver past three years
• Large reductions of spend

with other carriers, bringing improved performance and reliability

• Customer experience at

world class level

2012 2011 Number of fibre-fed buildings 2013E 2,723 2,388 2013E 2012 2011 Telco intercarrier costs (in millions $) $180 $215

Allstream – more on-net, more profit

2012 61%

2011 55% On-net IP revenues (percent)* 2013E 2012 15.2% 2011 13.1% Total EBITDA margin (percent) 2013E

• IP on-net focus delivering

revenue strength

• Nine quarters of year-
• ver-year EBITDA growth
• Revenue down but

EBITDA growth

• #1 data supplier to

Federal Government

CRTC’s wireless code of conduct

• MTS supports development of uniform national code
• Consumer protection legislation already exists in Manitoba
• Support several suggested initiatives:

unlocking of devices; clear disclosure

• f pricing; effective notification of usage
• Code should set minimum standards

for transparency while fostering competition and investment

Our strategy

• Expand MTS leadership in Manitoba
• Increase ARPU in MTS growth products
• Accelerate Allstream IP growth
• Grow free cash flow
• Deliver improved cost structure
• Pursue customer experience improvements

What will the future bring?

We expect:

• To be done with major legacy declines
• More wireless data growth
• Continued growth in MTS multi-product customers with

leading bundles

• More cost improvements supporting EBITDA margins
• Allstream to align with pure IP providers and generate

top-line growth

• To improve Allstream EBITDA margins towards 20% target
• Leading customer experience

Questions and answers

Closing comments

MTS Allstream

For further information, please contact: Investors Paul Peters – Investor Relations 204-941-6178 investor.relations@mtsallstream.com Media Selena Hinds – Corporate Communications 416-345-3576 or 204-941-8576 media.relations@mtsallstream.com mtsallstream.com Investors section at http://www.mts.ca/mts/about+mts+allstream/investors

Contacts