Investor Presentation May 2016 alaskacommunications.com 1 | - PowerPoint PPT Presentation

Investor Presentation May 2016 alaskacommunications.com 1 | Alaska Communications

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.” alaskacommunications.com 2 | Alaska Communications

Investment Highlights Capturing Serving Alaska’s unique, Unique attractive and growing $1.5B broadband and managed IT market Opportunity Leveraging Differentiated product set and high quality network and Competitive customer service drives retention and acquisition Advantages Creating R ecord of consistently posting industry leading revenue growth and Shareholder committed to expanding Adjusted EBITDA margins and FCF Value alaskacommunications.com 3 | Alaska Communications

$1.5 Billion Market, 85% Business, Growing 3-5% a Year Opportunity: High Opportunity: High Margins: Moderate Margins: High Competition: Fragmented Competition: Limited Broadband, IT Services, 27% 47% Voice, Managed Network 11% Services, 15% Opportunity: High Opportunity: Low Margins: Moderate Margins: High Competition: Limited Competition: Limited Unique mix of competitive environment, growth opportunity and margin potential creates conditions for driving profitable growth over the long term alaskacommunications.com 4 | Alaska Communications

Alaska Economy: Change Creates Opportunity Alaska’s Options for Securing Future Economic Conditions Create Opportunity  The State goes into Fiscal 2017 with:  Creates incentive to look for change. Sectors with the greatest, direct exposure to oil prices: ~$50B in State’s Permanent Fund, which ‒ will continue to generate earnings over time ‒ State Government ‒ ~$13.7B in State reserves providing runway ‒ Energy Sector ‒ Projected deficit of ~$3.5B  Alaska Communications has  Levers available for a thoughtful fiscal policy: ‒ low exposure to both sectors – collectively less than 5% of our total revenues ‒ Lower Spending on Government ‒ low share of wallet in both sectors – less ‒ State income and sales taxes than 10% – far lower than our aggregate ‒ Modify how Permanent Fund market share earnings are used  Creates new revenue opportunities for Alaska  Reserves provide runway for the State to adjust Communications as customers seek greater to its new fiscal policy value not currently provided by the incumbent alaskacommunications.com 5 | Alaska Communications

Superior Network Coverage Positions Us for Growth alaskacommunications.com 6 | Alaska Communications

Superior Fiber Based Broadband Network Extensive long haul fiber network: - 6,000 miles submarine and 8,000 miles of terrestrial route miles - 100G wavelengths in-state backbone with diverse routes -- Secured key fiber assets on Alaska’s North Slope supporting the oil and gas industry - High-capacity network extensions into L48 to customer locations and data centers including CyrusOne in Houston. Strong metro access fiber & broadband network: - Over 450 buildings, representing 85% of multi-story multi-tenant facilities, on fiber - 45% of consumer locations at or above 10Mbps capability - Commencing deployment of GPON access nodes in business areas - All military bases on fiber State-of-art service IP capability on network: - Juniper IP/Advanced Ethernet core – provides statewide IP & MEF 2.0 Certified Ethernet services - 50% of business locations MEF 2.0 enabled - Widely deployed Metaswitch voice application soft-switch network alaskacommunications.com 7 | Alaska Communications

Selected by Leading Businesses and Organizations DIVERSE CUSTOMER VERTICALS HEALTHCARE CARRIER/FED OIL & GAS STATE/LOCAL SMB EDUCATION STRATEGIC COMMERCIAL Kodiak Area Native Assoc. alaskacommunications.com 8 | Alaska Communications

Customer Relationships Drive Top Line Growth New and Strengthened Great Technology and Better People: Customer Relationships We Win on Service  Secured several large and strategic wins  “… Your solution provided options for our business that we hadn’t even considered ‒ State of Alaska before. We are excited to be a business ‒ Akeela partner with ACS …” ‒ Federal Agency  “... response to [our] WAN RFP was well ‒ Educational Institution written and provided the greatest value to [us] going forward and in this fiscal environment will  Added 600+ new Small / Medium Business allow [us ] to future-proof our Network capacity customers for some time to come ...”  Retained several existing customer  “ … The system installed in our facility is hands relationships with multi year contract down the best of all 11 educational institutions extensions, including: like ours … Using your infrastructure drawings ‒ Large National Carrier as a baseline … will have capabilities beyond what we could have imagined prior to this ‒ Large Federal Contractor project .” ‒ Chugach Electric  “…You really listened to us, really listened to our needs and it showed in your value adds…” alaskacommunications.com 9 | Alaska Communications

Product Capabilities Create Differentiation and Value Expanding Roster of Partnerships First with Next Generation Products  Managed Security:  SIP Trunking: Watchguard IT: Gold Partner ‒ All major metro markets in Alaska ‒ ‒ Based on QoS Enabled, Secure, MEF  Communications: Certified IP Network Avaya: Silver Partner ‒  Hosted Voice over Internet  IT Infrastructure: ‒ All major metro markets in Alaska Microsoft: Gold Partner, Small Mid-Market ‒ Upgraded to High Definition Voice ‒ Solutions, Data Center Silver Partner ‒ With Unified Communications for Collaboration Barracuda: Storage MSP Partner ‒   Cloud: Managed Networks: ‒ Proactive management of Enterprise Class Microsoft: Silver Partner, Small Mid-Market ‒ networks Cloud Solutions, Azure ExpressRoute Partner ‒ Customer Portal capabilities for self CyrusOne: IX (Internet Exchange) management and reporting ‒ Connection alaskacommunications.com 10 | Alaska Communications

Operational Initiatives Drive Service Improvements and Margin Expansion  Committed to LEAN ‒ Eliminates waste while improving service ‒ Develops capacity and scale in our operations  Implementing technologies drives service improvements ‒ Online and mobile customer service capabilities ‒ Automation in Field Operations management is driving improved service capacity  Rigorously measuring customer service at nearly all customer touchpoints ‒ Net Promoter Score measured for all customer interactions. ‒ Strong improvements in year over year transactional NPS indicate service quality improvements Collectively, increased capacity drives margin expansion, while improved service quality drives customer retention and acquisition alaskacommunications.com 11 | Alaska Communications

Superior Revenue Growth Continues TOTAL WIRELINE REVENUE GROWTH Q1 Q1 ($ in M) % Increase YE 2015 YE 2014 % Increase 2016 2015 Business and $33.5 $30.0 11.9% $126.5 $115.1 9.8% Wholesale Consumer $9.5 $10.2 (7.0)% $40.0 $41.5 (3.5)% Regulatory $13.3 $13.5 (1.9)% $53.3 $58.5 (8.9)% Total Wireline Revenue $56.3 $53.7 4.8% $219.8 $215.1 2.2% Reclassified revenues, providing more transparency in our wireline business including concise reporting for regulatory revenue. Annual Performance Quarterly Performance Sources: Respective company public filings. alaskacommunications.com 12 | Alaska Communications

Superior Revenue Growth Driven By Broadband BROADBAND REVENUE GROWTH Quarter Annual ($ in M) ($ in M) $104.8 $27.9 $93.4 $25.0 Business Business $51.1 Broadband Broadband $14.2 $44.5 $11.8 Wholesale Wholesale Broadband Broadband $28.1 $23.2 Consumer Consumer $6.6 $7.6 Broadband Broadband $25.7 $25.6 $6.6 $6.1 YE 2014 YE 2015 Q1 2015 Q1 2016 PEER BROADBAND REVENUE GROWTH COMPARISONS Quarter Annual 16.0% 12.3% 13.0% 11.4% 11.3% (2014 - 2015) ALSK 8.6% 5.2% Peer Group 5.0% 4.5% 4.5% 4.0% Average 3.2% Q115 Q215 Q315 Q415 Q116 ALSK Peer Group Average The peer group average includes CBB, CTL, FRP, FTR, HCOM, LMOS and WIN. Sources: Respective company public filings. alaskacommunications.com 13 | Alaska Communications