June 2013

Transcription

1 June 2013

2 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 on 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. 2

3 Allstream sale - announced May 24 Key elements of the transaction MTS has agreed to sell Allstream to Accelero Capital in transaction valued at $520 million. Transaction is expected to close in the second half of 2013, subject to receipt of Investment Canada approval and customary closing conditions. Sale enables Allstream to accelerate its strategy towards achieving long-term sustainable growth. MTS will continue to be the pension sponsor for existing Allstream retirees. o Allstream employee pension plans will be retained by Allstream but MTS has committed to funding pre-closing solvency deficit. 3

4 Planned use of proceeds This transaction makes MTS stronger, benefits all our stakeholders and aligns our investment profile and value with our investors expectations. After closing costs, MTS expects to realize net proceeds of approximately $405 million. Proceeds will help fund pension obligations o MTS will use $170 million for additional pension plans prefunding. o We expect no need for additional payments until o MTS will use $70 million in short-term debt to pre-fund pension obligations. MTS will determine its planned use of the remaining transaction proceeds upon the close. 4

5 TSX : MBT - investment profile A stronger MTS Leading, pure-play regional telecom provider. Strong, industry-leading EBITDA margins, stable and growing. Large free cash flows support our dividend policy. Solid revenue profile with approximately 60% of revenues from strategic services including 38% from wireless. o Q strategic services growth of 2.4%, over Q No cash taxes until 2019 or later. No additional pension solvency payment requirement expected before 2016 (with no future funding if long-term interest rates rise by 1% or more). Continued focus on cost management. 5

6 Memorable brand Top coverage Superior customer retention Best bundles 6

7 MTS Manitoba s leading full-service communications provider First in Manitoba to launch 4G LTE network. FTTH network growth broadband expansion continues, currently in 11 communities. 90+ retail locations across the province. Unsurpassed brand recognition MTS Centre and MTS Iceplex. 3,000 employees with a long track record of serving Manitobans. Economic impact in Manitoba close to $1 billion per year. 7 mtsallstream.com MBT : TSX 7 Photo courtesy of Gerry Kopelow

8 MTS the market leader in Manitoba We continue to leverage our competitive advantages to maintain strong market share and grow revenues. Wireless Wireline Internet IPTV * Greater Winnipeg area. 8

9 MTS - solid revenue growth Wireless data revenues, up 26.5% ($ millions) Q $29.6 Q $23.4 Internet revenues, up 4.9% ($ millions) Q $27.8 Q $26.5 Q revenue mix IPTV revenues, up 2.6% ($ millions) Q $19.9 Q $ % 60% Legacy services Strategic services 9

10 MTS - driving success Some of the highest ARPU in Canada and growing. Wireless customers and ARPU Q ,216 $60.25 Q ,571 $59.78 Q ,722 $56.73 IPTV customers and ARPU Q ,289 $66.63 ARPU growth in all strategic product lines. Q ,695 $66.35 Q ,468 $58.63 High-speed Internet customers and ARPU Q ,643 $41.57 Q ,247 $40.01 Q ,899 $

11 MTS results * : Strong and growing free cash flow and EBITDA Free cash flow EBITDA $477.5M $130.1M E E Completion of certain 2012 capital investments such as our wireless billing system upgrades and 4G LTE wireless network build, leads to increased free cash flow in * Excludes Allstream results. 11

12 MTS owns the home in Manitoba Focus on growth in wireless, IPTV and high-speed Internet. MTS offers unique bundles - wireless, television, Internet, home phone and security services. Bundled customers have less than half the churn of customers who are not on a bundle. Over 97K bundled customers in Q1 2013, up 6.6% over Q

13 Bundles - our customers preference Bundled customers 2013E , , ,000 Four-service bundles Two and three-service bundles Unmatched bundling service plans. Unique and flexible bundle plans. Very low churn and higher ARPU with bundled customers. 13

14 MTS s fibre optic network Providing customers with higher quality, more reliable services. Launched in 2010 our fibre-to-the-home FiON network is now deployed in 11 communities in Manitoba and covers close to 30,000 homes in Manitoba. Part of our commitment to grow the reach and quality of our broadband networks. Our combined FTTH and VDSL networks allow us to provide high-speed Internet and IPTV to over 95% of Manitoba s two major urban centres and a growing number of other communities. 14

15 MTS solid wireless results 23.9% 26.5% $59.68 $60.04 $ % $ % 6.5% 6.8 * % 17% 3.2% Bell Rogers Telus MTS Bell Rogers Telus MTS Wireless revenue growth Wireless data revenue growth Bell Rogers Telus MTS Blended wireless ARPU * Subscriber revenues, less one-time equipment sales. 15

16 Tax asset value $ 290M estimated NPV of tax asset as at March 31, 2013 Tax asset worth $4.30 per share (March 31, 2013). MTS retains all of the tax assets as part of the Allstream sale. Annual cash savings of $45 to $50 million. No expectation to pay cash taxes until 2019 or later. 16

17 Credit metrics Telco comparisons (December 31, 2012) 1 Post Allstream sale announcement, S&P and DBRS confirm MTS s investment credit rating. MTS Telus BCE Bell Aliant Net debt 2 to capitalization 54.6% 46.8% 52.3% 46.4% Net debt/ebitda 1.6x 1.6x 2.0x 2.3x EBITDA coverage 10.2x 12.0x 9.1x 8.9x DBRS rating/trend BBB/stb A(1)/stb BBB(h)/stb BBB/stb S&P rating/trend BBB/stb BBB+/stb BBB+/stb BBB/stb 1 Source: Company financials 2 Debt due within one year + long-term debt capital leases + securitized receivables less cash, all as of December 31,

18 MTS strategies Build on MTS market leadership in Manitoba. Increase MTS growth product revenues. Grow our base of high-value bundled and multi-service customers. Expand broadband coverage and capabilities for TV and high-speed Internet. Expand 4G LTE coverage. 18

19 Appendix - definitions EBITDA EBITDA is defined as earnings before interest, taxes, depreciation and amortization, and other income. EBITDA should not be construed as an alternative to operating income or to cash flows from operating activities (as determined in accordance with International Financial Reporting Standards) as a measure of liquidity. Free cash flow Free cash flow is a non-ifrs measure of performance. MTS Allstream defines free cash flow as cash flows from operating activities, less capital expenditures and excluding changes in working capital and pre-funded pension solvency payments. Free cash flow is the amount of discretionary cash flow that the Company has for purchasing additional assets beyond its annual capital expenditure program, paying dividends, buying back shares and/or retiring debt. The term free cash flow, as it relates to 2013 and 2012 results prepared using IFRS, does not have any standardized meaning according to IFRS. It is therefore unlikely to be comparable to similar measures presented by other companies. 19

20 For further information, please contact: Investors Media Paul Peters Investor Relations Selena Hinds Corporate Communications Investors section