The Board of Directors today approved the fourth quarter dividend which has been set at $0.65 per share.

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1 MTS THIRD QUARTER 2007 CONFERENCE CALL NOVEMBER 1, 2007, 4:00 P.M. EDT IAN CHADSEY, Vice-President of Investor Relations, Manitoba Telecom Services Inc.: Good afternoon, everyone, and welcome to the call. Earlier today we issued our third quarter news release, MD&A and supplemental package, which are available on our website at mtsallstream.com. Today's comments may contain forward-looking information related to the finances and operations of the company, including comments on revenue, EBITDA, earnings, cash flow and capital expenditures. These statements are based on assumptions made by the company and run the risks that our actual results may differ from those anticipated. The statements made today reflect the assumptions of MTS as of November 1, 2007, and accordingly are subject to change after that date. MTS disclaims any intention or obligation to update or revise the statements, whether as a result of changing circumstances, future events or otherwise. These cautionary statements are made on behalf of each speaker whose remarks contain forward-looking information. The Board of Directors today approved the fourth quarter dividend which has been set at $0.65 per share. On today's call we have Pierre Blouin, Chief Executive Officer; Wayne Demkey, Chief Financial Officer; John MacDonald, President of the Enterprise Solutions Division; Kelvin Shepherd, President of the Consumer Markets Division; and Chris Peirce, Chief Regulatory Officer. With that, I'll turn the call over to Pierre. - PREPARED REMARKS - PIERRE BLOUIN, Chief Executive Officer, MTS Allstream Inc.: Thank you, Ian. Good afternoon everyone. Thank you for joining our third quarter conference call. Earlier today, we released our financial results for the third quarter and I think that these results demonstrate that MTS has continued to build strong and sustainable momentum in the third quarter. In fact, over the past 21 months I think we've worked hard to reposition MTS to make it a stronger company and we're well on our way in realizing that goal. Through the first nine months of the year, we're on track not only to meet our guidance for 2007, but to exceed our target for EPS that we had already raised in the second quarter. We also continue to expect to achieve the high end of the range of our guidance for EBITDA and free cash flow as a result of the strong performance from our operations. Today, we're increasing our EPS target range to $2.65 to $2.85, up $0.10 per share from our increased projection last quarter. In total for the year, we have increased our EPS target by $0.35 per share from the initial range we projected at the beginning of the year. Our ongoing operations have continued to make significant - 1 -

2 progress in a number of areas through the third quarter and the first nine months of Our growth services, which include wireless, high-speed Internet, digital television, converged IP services and unified communications, continue to add customers and revenues at double-digit rates. Growth services revenues growing at double-digit rates - continue to be the driver of our better performance and combined with the success of our cost reduction programs, are enabling us to deliver improved results. Revenues from our growth services were up 13% to $194 million in the third quarter, and year to date, they represented 39% of our total revenue as compared to 35% last year. We're well on our way to achieve the projected 40% level in 2007, confirming our success with rapidly transforming our company. Total revenues from continuing operations in the third quarter have continued to improve as they were flat year-over-year, as compared to being down 1% in the second quarter of this year. As we saw in the second quarter, our revenue performance is still masked by the reductions of the Rogers and AT&T contracts as they continue to migrate their business from our network to their own networks. If we exclude the related impacts, our total revenues have increased by approximately 2% from the third quarter of This is a significant milestone, as it highlights the success of our strategy to shift our dependency from legacy to growth services. Other highlights from the quarter include: Our consumer residential access lines remaining stable and continuing to trend with significantly fewer lines losses for the last four quarters. Let me note that these achievements reflect our performance prior to being forborne in Winnipeg, which will add to our flexibility to react to competitive actions and enable us to better meet our customer needs. Our mid-market national business initiative, which we'd launched earlier this year, continues to demonstrate strong results, with 369 new contracts won year to date. Our small business bundle sold under the Allstream brand was successfully launched in the Vancouver market. Early responses to our offer in this test market have been positive. We continue to improve our customer service in all our markets by offering a solid and differentiated customer experience. Our customer satisfaction results are confirming it. And, we remain on track to deliver on our annual cost saving target of $40 million to $50 million for At the end of September, we had achieved $33 million of annualized cost savings. Wayne will provide more detail on the financial highlights for the quarter and year to date in just a few minutes

3 I'd like to turn now to some of the key highlights from our operations, beginning with our Enterprise Solution division. In the third quarter, our Enterprise Solutions division, which operates under the Allstream brand, continued to improve its performance. Revenue from growth services increased by over 13% as compared to the third quarter of The division s EBITDA is still being impacted by Rogers and AT&T product migrations, however if we exclude the related impact, the EBITDA would be stable for the first nine months of Our IP-VPN enterprise customer count grew to 239 in the quarter, up from 158 a year ago. We signed $49 million in new enterprise contracts in the quarter. Significant new contracts included: A $6 million contract with Transat. This contract includes a global managed data network IP service and communication services for Transat locations across North America and France. A contract with Western Canada Lottery to provide IP connectivity and network management for their network of gaming terminals in Manitoba, Yukon, the Northwest Territories and Nunavut. This eight-year contract will see MTS Allstream provide MPLS connectivity to nearly 900 retail locations and will also provide managed wide area network services in all locations. A significant new contract win with ADP to supply telecommunications and software development services. And just last week, we signed a three-year expansion with Primus Canada worth more than $70 million. The contract includes IP data networking, long distance and local services. During the quarter, our Enterprise Solutions division also launched the innovative Secure Connect service, building upon our national IP network and establishing a new standard for the delivery of firewall and VPN services to customers. I'm also pleased to report that MTS Allstream's relationship with Microsoft continues to grow stronger. In mid-october, Microsoft launched its newest unified communications product, Office Communications Server - OCS Thanks to our close relationship with Microsoft, we were chosen to participate in Microsoft's Technology Adoption Program. Through this program, we were able to experience the OCS product 18 months before it hit the market and provide input to its development. MTS Allstream was one of only three Canadian companies asked to participate in this program, and was the only integrator presence. We're also actively participating in the launch of Microsoft s OCS product across the country

4 Now turning to the Consumer Markets division: we delivered solid wireless results with revenues increasing by close to 16% and customers by 10% in the quarter. For the year, ARPU increased by 5% or $2.72, supported by a strong increase in wireless data services. High-speed Internet had an excellent quarter as well. The customer base increased by 15.7%, contributing to a year-over-year revenue increase of close to 15%. Our digital television service increased its customer base by 25% and revenues by 30%. In October, we achieved another significant milestone as we pushed past our 75,000th customer in Winnipeg. We also continue to see improvements in the competitive residential telephony marketplace in Winnipeg. Our win backs reached a strong 1,900, an increase of 38% from Almost 80% of win back customers bring at least two additional growth products with them when they return to our company. Our bundling strategy continues to be the cornerstone of our success. We now have 67,000 customers in Manitoba participating in our bundled product offerings, an increase of 33% over last year. Our bundling strategy has allowed us to sustain growth in our growth products and stabilize our local losses. Total ARPU for bundle customers is up 2%, and our churn rate is down by 68% when compared to non-bundled customers. We believe that these results have placed MTS Allstream ahead of the curve in the consumer space. Turning to the regulatory front, where the third quarter was a very active time for the entire industry. On August 3, the CRTC granted MTS Allstream forbearance in the Winnipeg residential market. On September 27, we applied for residential deregulation in the city of Portage la Prairie, and we're awaiting the CRTC decision. In a CRTC hearing on essential facilities, MTS Allstream made the case that a robust definition of essential facilities is important to ensure continued innovation, competitive pricing, and sustainable competition, especially in the business market. We support the approach that reliable network access for competitors coupled with retail deregulation allows for maximum reliance upon market forces and is the least interventionist regulatory approach. We expect a decision from the CRTC by mid I'd now like to take a minute to expand on a potential national wireless initiative. We believe that the opportunity for a fourth national wireless player in Canada is significant, and has the potential under the right circumstances to create meaningful long-term value for MTS shareholders. But the key words are "under the right circumstances." Until we have the time to analyze the spectrum auction rules and evaluate the financial and partnering models that are presenting themselves to us, we cannot fully evaluate the opportunity and we will not make any decisions about whether or how to proceed. What I can say is that together with our Board, we have put in place business principles that we are following as we review this opportunity. Like everything we've done since the beginning of our business review in early 2006, we will be disciplined and thorough in our analysis of this opportunity. Our goal, as always, is to create and deliver value to our shareholders. We will only consider a national wireless initiative if the spectrum - 4 -

5 auction rules meet our requirements. While we have the capacity to pursue a national wireless strategy on our own, our preference is that we would do so with strategic and/or financial partners. On that front, we have been approached by, and are in discussions with, a variety of potential partners, both strategic and financial, who view our assets and experience as a regional wireless carrier as strategic. These potential partners could contribute significant capital to wireless expertise, international perspective and overall sponsorship. In addition, we expect the number of interested parties to increase should favourable auction rules be announced. I want to be clear that management and the Board fully recognize the value of the MTS dividend as for our shareholders. It is our preference to design plans for our potential wireless participation around the principle of maintaining our current dividend. We are exploring many alternatives that would enable this outcome. Dividend payments are a Board matter, decided each quarter based on many factors, and publicly held companies cannot make any commitment under any circumstances to the payment of a specific amount of future dividends. Should we decide to proceed, we expect to have the ownership structure and satisfactory financing arranged by the time of the auction. However, no decisions on a potential national wireless initiative will be made until several months following publication of the auction rules. The bottom line for now is that we're doing our homework. We continue to be focused on creating long-term shareholder value and we will only proceed with national wireless if the circumstances are right. In summary, MTS Allstream continues to achieve solid and improving financial and operating performance and we are confident that we are well positioned to continue to be successful in Canada's rapidly changing telecom industry. Now I'll turn the call over to Wayne. WAYNE DEMKEY, Chief Financial Officer, MTS Allstream Inc.: Thank you Pierre and good afternoon everyone. We're pleased to report the seventh consecutive quarter of solid financial results for MTS Allstream. Our results for the third quarter and for the first six months of this year continue to underline the progress we have made to improve the fundamentals of our business. Our financial highlights for the third quarter include: Double-digit increases in all growth services for both our Enterprise Solutions and Consumer Markets divisions. This continuing strong performance drove consolidated revenue growth of almost 2%, and Enterprise Solutions division revenue growth of 0.5% this quarter when you exclude the impact of Rogers and AT&T. This marks the second quarter in a row that our Enterprise Solutions division achieved positive growth in revenues when these two exiting customers are excluded

6 First, I'll review our consolidated results from continuing operations and then look more closely at our growth services and legacy businesses for our Enterprise Solutions and Consumer Markets divisions. We discuss results from continuing operations because we believe they assist investors with understanding the performance of our company. Reported results include a number of items, such as the cost of restructuring that we've undertaken over the last 20 months, which are not from continuing operations. These items are outlined in our third quarter news release and MD&A. Earnings per share from continuing operations were strong in the third quarter, increasing 18% to $0.73 as compared to the third quarter of last year. This increase resulted from increased EBITDA, lower amortization, lower debt charges and fewer shares outstanding. The increases in EBITDA both in the third quarter and year to date reflect the higher percentage of revenue coming from growth services and the continued success of our cost reduction initiatives. Revenue in the third quarter was flat as compared to last year and was down 1.4%, as expected, year to date. More importantly we have realized positive revenue growth of approximately 2% for the quarter and 1% year to date, when we exclude the migrations of Rogers and AT&T to their own networks, which began about two years ago. The strong performance in our growth services, which increased by 13.2% for the third quarter, and 11% year to date, was a major contributor to our results. Growth services, which include wireless, converged IP, unified communications, digital television and high-speed Internet services, represent a growing proportion of our business at 39% of our total revenues in the first nine months of 2007, up from 35% last year. Free cash flow for the first nine months of 2007 remains strong at $241 million, which more than covers all cash requirements, including, non-recurring items such as restructuring expenses and all pension costs. Turning to the cost side, operations expense was 3% lower than a year ago at $917.1 million, demonstrating our strong performance in the realigning our cost structure. In 2007, we expect to achieve annualized cost savings of $40 million to $50 million through additional cost reduction opportunities identified under our efficiency program. During the nine months to September 30, 2007, we realized end year savings of $28 million, representing annualized cost savings of approximately $33 million from operational efficiencies and our decrease in usage of competitor networks. Now let's look more closely at our growth and legacy services businesses. Wireless revenues year to date grew 15.8% on the strength of a 10% increase in cellular customers and a 4.8% or $2.72 increase in average revenue per unit. We could also confirm that we are not seeing any meaningful impact from wireless number portability

7 High-speed Internet revenues also showed significant growth, up 12.7% year to date, on the strength of customer growth which was 15.7% at the end of the third quarter. Digital television services continued to show strong growth, with revenue up 30.5% in the third quarter and 34.2% in the first nine months of this year, driven by a 25.3% increase in our customer base and a $1 increase in ARPU. The popularity of our TV product is clearly demonstrated by our increasing market share, which has reached 30% in Winnipeg. We achieved another significant milestone by signing up our 75,000 customer in October. Our next generation data services, which comprise converged IP and unified communications services, achieved double-digit growth of 13.1% in the quarter. Our converged IP revenues were up 11.3% in the first nine months of 2007, and our unified communications revenues increased by 19.4% this quarter, as we continue to gain momentum and achieve higher sales volumes. As for our legacy services, they declined as expected. Included in these declines are reduced revenues associated with Rogers and AT&T, along with customer migration to newer IP-based growth services and the impact of competition and reprice primarily in our long distance line of business. Although the decrease in our long distance line of business may look higher compared to other telcos, if you exclude the impact of Rogers and AT&T this decrease is in line with what we have seen at other telcos. Importantly, we've made significant progress in stabilizing our legacy business and our Consumer Markets division, and by cross-selling growth services to legacy customers of our Enterprise Solutions division. Stabilization of our residential line losses in Manitoba has continued over the last four quarters, reflected in the significantly reduced rate of line losses. This improvement demonstrates the continued success of our win back and retention programs, and the strength of our customer value proposition through our bundled strategies. Overall, when you look at total customer connections, which include: network access, high-speed Internet, wireless, and digital television services, they have increased almost 3% at the end of the third quarter, as compared to the same period in All in all, we're pleased with our performance. Notably our growth services, the impressive performance of our Enterprise Solutions division and the increasing stability we are achieving with legacy services. For the year as a whole, as Pierre has outlined, we've increased our earnings per share guidance to $2.65 to $2.85 per share and expect to achieve the high end of our guidance range for EBITDA and free cash flow. During the third quarter of 2007, capital expenditures were $20 million higher as compared to the same quarter last year, due to timing differences between this year and last year. As a reminder, our capital expenditure requirements for 2007 are similar to 2006 in the range of 14% to 15% of revenue. At this level, our capital expenditures are below what you're seeing in other telcos as we are benefiting from the significant - 7 -

8 investments in state-of-the-art networks that we completed over the past number of years in each of our divisions. With respect to the share buyback program, as we indicated in the press release, we've refrained from making additional purchases under the program over the past few months. We've done so in order to preserve our ability to take advantage of various possibly emerging opportunities to create value for MTS shareholders. Obviously this includes a potential national wireless initiative, but this should not be construed in any way to mean that we have made any decisions in that regard. Should an opportunity acceptable to the company not materialize, we plan to complete the $320 million share buyback program. The Board and management are unanimous in their views that refraining from making purchases under the share buyback program for the time being is in the best interest of MTS shareholders. With our continuing strong results and positive outlook, the Board of Directors has declared a fourth quarter cash dividend of $0.65 which is payable on January 15, 2008 to shareholders of record on December 31, On an annualized basis, our dividend ranks us as one of the highest yielding stocks on the TSX. Thank you. We'd be pleased to answer questions you may have. - QUESTION-AND-ANSWER SESSION - GREG MACDONALD, National Bank Financial: My question is on the Enterprise Solutions division. Could you provide me with a better understanding of what the business looks like without the Rogers and AT&T revenue streams and are you prepared to share what the most recent quarter revenue impact was? Secondly, could you provide a profile of your new business contracts? As IP businesses generally have lower margins but higher free cash, I'm trying to get a sense of what forward-looking margins are in the national division. With margins down at the 16.5% or so range, is there a future margin expectation that we should be looking to model or is it going to continue to trend down in the future years? JOHN MACDONALD, President Enterprise Solutions division, MTS Allstream Inc. As Wayne indicated, excluding the impact of the Rogers and AT&T migrations, we are seeing growth in the Enterprise Solutions division. To characterize future growth opportunities, we are seeing very strong margin performance in the converged IP arena. Speaking specifically to gross margin, we are seeing strong gross margin performance but less strength in converged or unified communications, and professional services. While there is a mix of factors to be considered in terms of the overall impact in terms of the enterprise contribution to gross margin, we don't see anything that was significantly altering the bottom line EBITDA percentage as a total of revenue as we continue to migrate more customers to growth services

9 GREG MACDONALD, National Bank Financial: To confirm, I understand you correctly, converged IP has higher than current gross and unified communications has lower than current gross, but generally speaking forward gross margin should remain relatively stable? JOHN MACDONALD, MTS Allstream: Yes, that's fair, Greg. We have projected and continue to see reductions from Rogers and AT&T in the neighbourhood of $40 million to $60 million for the year, or about $10 million to $15 million per quarter. It is continuing a little closer to the bottom end of that range, but we're basically still on track. GREG MACDONALD, National Bank Financial: At what point do you anticipate that they will be completely off your networks? JOHN MACDONALD, MTS Allstream: We'll continue to see some revenue from them for quite a long time but basically by mid-2008, we'll no longer be seeing the same level of large reductions. WAYNE DEMKEY, MTS Allstream: It doesn't mean that the revenue will go to zero for both parties. With Rogers, for example, we'll continue to do business if we have a competitive offer for services that they can't provide themselves. However, there are services that they can provide with their own networks and those are the ones that we're referring to here. GREG MACDONALD, National Bank Financial: (check tape) If I were to say by mid-2008, the marginal impact of the Rogers and AT&T businesses would be relatively stagnant and revenues stable and flat year-over-year, I wouldn't be too far off? JOHN MACDONALD, MTS Allstream: Yes, I would say even sooner. If you looked at our Enterprise Solutions division, our revenues have been relatively flat through each quarter for the last number of quarters and just marginally down from last year. However, I would say we expect to see growth in 2008 including all customers. GREG MACDONALD, National Bank Financial: Can you provide an update on pricing activity in the quarter on the national side, John? Has this changed marginally relative to the second or first quarters? JOHN MACDONALD, MTS Allstream: It's difficult to characterize but the indicators we re seeing lead me to conclude that there is less pressure overall from a pricing perspective. I tend to see the large contracts that everyone pursues fairly aggressively. Once again when we exclude what we're seeing in terms of Rogers and AT&T, I would say that I am somewhat encouraged in terms of our prospects and see some degree of rationality returning to the Enterprise side of the business. What one has to realize is that we're talking about specifically the large - 9 -

10 contracts that come up for renewal every three years or so and these are the ones that everyone pursues quite aggressively. There's a lot of business in the mid-markets and, that really doesn't have the same kind of exposure. In many cases, we have the ability to migrate customers from legacy services into next generation services while holding the margin performance up, holding the total revenue, and in some cases, increasing the revenue from a particular customer as we sell them more services. It is difficult to characterize it at a point in time, but I'm somewhat encouraged in terms of what I see overall in the marketplace. ANDREW CALDER, RBC Capital Markets: You seem pretty convicted on taking a look at the wireless opportunity, and it's an opportunity that many investors find difficult to see as a positive business opportunity given the entrenched position of the incumbents. What are the key success factors of the opportunity that current shareholders would be interested in hearing about? Where exactly do you see this opportunity and how quickly do you believe a new entrant could begin operating? First, the opinion of some people is that it is not possible for MTS Allstream to successfully enter the national wireless market. I think it's a bit premature to come to this conclusion as the rules of the game are unknown. We are talking to potential partners who are both strategic and financial. They are very credible players in my opinion, and I come from the wireless sector. What they're seeing in our company is that we would not be starting from nothing. We would be leveraging a great deal of assets and skills that we already have in our company. One has to realize that we've been looking at this initiative for a long time with advisors, both financial and strategic. We've talked with service providers around the world about how they've launched, in some cases, a third, fourth, fifth or sixth wireless player in different markets. We've been in discussions with network vendors to examine how our network could be built in Canada. We've looked at business plans, and we've talked with executives that have launched wireless service providers in Canada. We've done and are still doing a large amount of homework and we believe that this is an opportunity that we have to take a serious look at, but it is very highly dependent on the spectrum auction rule. As I said in my remarks, our preference would be, assuming the rules are positive, to move ahead with partners who bring strength and skills to what we already have. There are quite a few parties that seem to be interested in working with us under very creative models. Having said this, there's a great deal work still to be done. There are a lot of numbers being put forth by many people. I consider many of these numbers reflective of what happened in Canada many years ago and not necessarily what could happen in the future. However, first things first, we have to wait for the spectrum auction rules. After the rules are known, we ll do further analysis and also confirm if partners are indeed interested in this opportunity and in working with us. I would say a lot of work is to be done on that. I think many of our shareholders do understand that as well and do understand the potential value and/or the potential risk. We and our Board understand that too. We will continue to do our homework. Clearly, the more intense period will be

11 once the spectrum auction rules are known. As we've said many times, if the base requirements are not included in the spectrum auction rules, we're not going to bid. It's that simple. We believe that we're very disciplined, we're prudent, we understand the profile of the company and we'll move forward in a very disciplined approach. ANDREW CALDER, RBC Capital Markets: Should there be preferable rules that would meet your criteria, how quickly do you believe a new entrant could begin operating? Again, it's difficult to speculate, depending on the rules, and in particular when the auction is. You can suspect that for any new player, whether they're a regional or national player considering to build a network across the country, it would be in stages so the first stage would be some major urban centre. If you look at the roll-out that has been done in other countries, it's quite fast considering what it was many years ago, so it s likely the beginning would be a few cities in about a year, depending how much pre-work has been done before the builds are started. BOB BEK, CIBC World Markets: To clarify your answer to Greg on the transition from Rogers and AT&T, how do you expect it to play to mid-next year? Because you've been pretty consistent on the revenue decline and EBITDA decline at the enterprise group, would you expect that to be consistent for the quarters through to mid-2008, would you expect it to start to taper as far as quarter-over-quarter declines? WAYNE DEMKEY, MTS Allstream: We expect the last quarter this year to have about the same level. We will be providing guidance for 2008 later in the year as we normally do. We'll probably be able to provide you with a better picture then. However, given that the total volumes are down, we expect that the decline would be less next year than it is this year. BOB BEK, CIBC World Markets: On the local line situation, line losses are very consistent and you ve had some success in bundling. Can you talk a bit about how the forbearance situation in Winnipeg might help local line losses in the quarters to come or whether you think this level of 3,000 losses per quarter will persist for a little while? Related to that, do you think that the television product has the opportunity to push past the natural ceiling levels of penetration given that it's in this bundle and the bundles have had success? KELVIN SHEPHERD, President Consumer Markets division, MTS Allstream Inc.: In terms of the forbearance question, we're clearly doing some things that we couldn't do before, or will be doing some things that we couldn't do before because we are now forborne. Many of those things are things like simplifying our offers and looking at how to better include services that previously couldn't be included in our offers, in a more effective way. We re also simplifying some of our billing and those types of things. I think the benefits from those initiatives are real but they're incremental. They won't

12 cause a dramatic change. We expect, if the results continue fairly stable going forward, to continue to push forward and see some slight improvement but not dramatic and certainly not just from the impact of forbearance. In terms of the digital television question, I'm not quite sure what the natural ceiling is. BOB BEK, CIBC World Markets: I was hoping you'd mention that. KELVIN SHEPHERD, MTS Allstream: It's clearly not 30%, so we can't go past that. BOB BEK, CIBC World Markets: That's a fair answer. Lastly, the average revenue per customer on the television has held steady at $47. How do you account for the $47, which is basically in the bundle? I'm trying to get a sense of the pricing for that product. KELVIN SHEPHERD, MTS Allstream: It includes the effect of both promotional pricing and discounting, and so you're seeing the full competitive effect of increasing penetration on markets through promotions. Over a period of time, we would expect to see some improvements in that ARPU as we have customers come off promotions. At that time, we ll get the opportunity to see the full effect of the retail pricing. DVAI GHOSE, Genuity Capital Markets: I'm a little confused because the Allstream story seems to be as exposure to Rogers and AT&T declines, the revenue declines will moderate. However, we did see that in Q1 it was 5.9% and Q2 was only 5%, though it was a good improvement. It spiked up to 6.1% in terms of decline in Q3, could you explain what some of the factors were? Was there more of a decline on the wholesale side or was it because of other revenues? And perhaps more importantly, I'm really confused about the margin issue because in Q1, a 6% decline in revenue led to a 7% decline in EBITDA, in Q2 a 5% decline led to a 13% decline in EBITDA, and this quarter is your worst ever in terms of EBITDA decline, as 6% led to 19%. It clearly implies that the non-wholesale revenues are at much lower margins than the wholesale revenues. I'm not quite sure how they can be comparable margins. WAYNE DEMKEY, MTS Allstream: By the sounds of your question, you're looking at the Enterprise Solutions division s revenues; if you look quarter-over-quarter in terms of revenue, we are down about 6% or 6.1%, and for the nine months, roughly about the same at approximately 6%. Our decreases have been relatively steady. The margin issue is going to fluctuate from quarter to quarter. I think that you ve included Rogers and AT&T revenues which are declining and if you take those out of the revenue structure, the decrease is much less and pretty close to flat year-over-year. We still have some work to do but we are making significant progress and our strategy is to continue pushing with our growth

13 services where we are seeing significant increases to offset the impact of those two customers, as well as repricing and churn in our legacy business. DVAI GHOSE, Genuity Capital Markets: While you're talking about a steady 5% to 6% decline this year, how does it suddenly become growth next year? Shouldn't it be improving? WAYNE DEMKEY, MTS Allstream: Yes, the difference is two things. One is that our growth services are becoming a much greater percentage of our overall revenue picture, so we are seeing close to 40% in terms of the proportion of our revenues that come from growth services. They do not suffer anywhere near the pressure in terms of pricing and erosion that we see in the legacy businesses. That's part of it. Also, we expect to see lower declines from Rogers and AT&T next year. It's through a combination of these two factors that we expect to create overall growth in revenues in our Enterprise Solutions divisions next year. DVAI GHOSE, Genuity Capital Markets: Pierre, you've kindly given us the numbers, if you exclude Rogers and AT&T, and not to be facetious, but if you exclude Allstream, you would have reported 6.4% revenue growth and 10% EBITDA growth, which is quite frankly, amazing. It wasn't your strategy to buy Allstream, you inherited it. Would you consider monetizing Allstream as a strategy for financing wireless? First, we have to decide if we ll pursue wireless expansion. Secondly, we've completed a business review in which we tabled that conclusion. We re always looking at the business and how to maximize shareholder value but as you may remember at the conclusion of the business review, we felt that the EBITDA and cash flow profile of the enterprise business was worth much more to the company, as it turned around and improved. That decision was looked at then and again. We're always looking at ways to improve shareholder value. In terms of wireless, first, let's get to the point where we can make a decision one way or another. DVAI GHOSE, Genuity Capital Markets: That's a fair point, and you may use that same for my third and last question, which is the GSM/CDMA question. Most potential entrants are suggesting they would employ GSM technology standards. While CDMA is a great technology, GSM has some definitive cost advantages over the CDMA. You have a regional CDMA network and potentially a national GSM network, how will that work? I don't think we've said that we would have a national GSM network. Our wireless business in Manitoba is very successful and we're pretty happy about that. We'll see as we go. They are two good technologies and both have advantages and disadvantages, so if ever we proceed towards wireless expansion, we'll address that element

14 PETER RHAMEY, BMO Nesbitt Burns: At the risk of beating a dead horse, Pierre, on the wireless opportunity, you mentioned three major principles. You've outlined with your Board the principle of maintaining your dividend, ownership structure, openness to consider any and all financing options and to have your plan together several months after the auction rules are released. When you look at the dividend issue versus your participation in any entity, how important is it? Is it one of your other principles that you would consider a minority position versus having control given that presumably any entity that you participate in would be using a lot of your assets in terms of backbone and wireless within your own province? It s difficult for me to say at this time. The one thing I can tell you is that when we look at the scenarios, we haven't established that we must absolutely be a majority owner. It will depend on the situation, how favourable the rules are and on our contribution. If we make a small contribution, I don't expect that we could be in a majority position. If we make a greater one then we'll see. Right now, we'll wait for the spectrum auction rules, we'll wait to confirm what can be done, if anything and then we'll move forward. As for the dividend, I've been fairly clear that this is something that the Board and management have understanding of its importance to the shareholders of the company and we will act accordingly. PETER RHAMEY, BMO Nesbitt Burns: It sounds like you'd adjust your interest in any joint venture with a view to maintaining your dividend. Well, if it's your conclusion, I think I've been pretty clear on that and we're going to have to wait and see how it goes in the future. PETER RHAMEY, BMO Nesbitt Burns: Fair enough. An operational question on the enterprise side. I believe you have about 15 million of new contracts signed in the quarter, I was wondering if we could get a flavour for how much of that is existing business being rebuilt back in? I note the Primus deal sounds like it was an extension. How much is incremental? Is it 75% existing, 25% incremental? If you can give us some flavour on that it would be terrific. Just one thing before John, the Primus contract was just a week ago and is not in the third quarter. JOHN MACDONALD, MTS Allstream: Primus, as an example, is where there was some reprice on a unit base associated with some of the services that were offered. The total number of services also went up so there's a net increase in terms of the yearly value from that contract. It certainly met our expectations. But if you look at Pierre's remarks, he mentioned that we're adding new

15 customers this year. We've added about 330 audio interference contracts. Some customers are new customers who've had multiple contracts so it's a slightly smaller number than that in terms of new business. The one of thing that we see as an opportunity is not just to renew an existing contract with an existing customer and move that customer to new technology but we can increase our share of wallet for an existing customer. For a large financial institution that we provide services to, we provide pretty much 50% of their total core network services but there's an opportunity for us to offer more professional services and security as well as unified communications because of more customer premise, IP-PBX types of services. You're going to see more of a focus from our division on not just growing new customers, as we've indicated through our rainmaker initiative this year, but also increasing our cross-sell opportunities so that we sell more products and services into any individual customer. We're seeing some success in both regards this year. PETER RHAMEY, BMO Nesbitt Burns: That sounds promising. Is there any way you can quantify a rule of thumb that you tend to get 10% more business every time you renew these customers or 20%? JOHN MACDONALD, MTS Allstream: No, I'd say there are examples where I could point to where we do increase the total number, but on a like-to-like basis, what we're seeing is that the customer is buying a certain amount of capacity for a certain rate. They either expect the same capacity for a lower rate or they want more capacity for the same rate, or any other variable as they want a wider variety of services. It's that mix that we're working with. The unit prices are going down, there's no question about it. What you have to do, is get the units up or you have to increase the scope of services that the customer is buying. VINCE VALENTINI, TD Newcrest: A couple of more questions on wireless from a different angle. Pierre, when you think about keeping the dividend or making it a high priority, I think there's two ways that it can be accomplished. One is to limit the amount of investment or perhaps take a minority interest, as Peter was alluding to; the other one is to adjust the dividend payout policy temporarily while you go through a period of heavy investment. Perhaps funding the new venture with debt and letting the dividend payout get even over 100% of free cash flow for a period of time. When you say you're committed to the dividend and it's a high priority, are you also committed to the reasonably realistic and conservative payout ratio you have or is that something you could sacrifice for a short period of time? Again, all these questions are very specific and I understand that you may be a bit unhappy by the lack of specificity in some of the answers, but until we know what we're facing it's very difficult to say. However, we have looked at some very creative scenarios that have been put on the table by credible partners and we re continuing to study and evaluate the situation. These scenarios are a part of a larger series of scenarios that are more or less demanding for the company, provide potentially lower or higher returns in the future, or have less participation or more in the venture or in the

16 consortium. We will have to see. Again, the real big first step is the spectrum auction rules themselves to see if we even have an opportunity to do anything. VINCE VALENTINI, TD Newcrest: You mentioned the timing, in terms of getting funding and partnership-type of arrangements in place before the auction, that the original expectation was for a January or February auction. It doesn't seem realistic that it could happen anymore. Assuming the rules come out in the next month, how long do you think it would take you to get this done? If the auction was going to happen in February, does that mean you ll say we can't get those partnerships done in time and throw your hands up? Do you really need until next June to accomplish all of this difficult negotiation? We would expect to have the ownership structure and financing arrangement in place at the time of the auction. We're a very agile company so we can move pretty fast if there's something interesting on the table. VINCE VALENTINI, TD Newcrest: If you don't get the auction rules you like or if you can't arrange the funding and partnerships to your satisfaction, would you commit to spending the rest of the money on the buyback on an accelerated basis, perhaps through a one-time buyback rather than a gradual normal course issuer bid? It's very difficult for me to commit on anything before seeing what we are working with in this respect. I would say is what Wayne has said - if the opportunity is in front of us then there's not only wireless. Some of you may think that only national wireless is on the table, but we are looking at a few other opportunities. Should none of these opportunities materialize, the full intention of the company is to quickly move forward and complete the buyback program. As we've talked about in the past, our plan is to continue to return between 70% and 80% of our cash flow to our shareholders. JOHN HENDERSON, Scotia Capital: Could you comment on the geographic expansion plans for MTS TV? Also, correct me if I'm wrong, you re at 650 metre loops, is the next evolution to shorter loops? Or a fibre to the prime build? How far away from that would we be in terms of years? KELVIN SHEPHERD, MTS Allstream: In terms of expansion beyond Winnipeg, we haven't announced anything yet and are now at a stage where we aren t planning to announce anything, but clearly it's something we continue to look at given the stats in Winnipeg. In terms of the loop question, the majority of our loops in Winnipeg are 650 metres. When we talk about our coverage, we talk about 95% or 96% of homes. That's actually at about a 900 metre loop, but we have about 85% of loops at 650 metres. The next logical evolution of our technology would likely be to go to a higher media cell technology - we're using media cell one today, which is a 26 meg technology - media cell two, which is probably going

17 to appear in the next 18 months or so. It offers speeds in the 30 to 40 megabit range, so it's the logical evolution step. Certainly fibre to the premise is something we're actively looking at for greenfield applications, but it's a little ways out I think for anything beyond what we're planning. JOHN HENDERSON, Scotia Capital: I have a follow-up on the Rogers/AT&T revenue erosion of $10 million to $15 million. I'll call it $11 million or so this quarter. How much of that might have hit EBITDA? What sort of margins should we expect on that business? KELVIN SHEPHERD, MTS Allstream: Our margins on that are in the 60% to 70% range. WAYNE DEMKEY, MTS Allstream: The range would depend on the service. It's not all one service. It might even be higher than that, but you'd be pretty close. JEFFREY FAN, UBS Securities: I understand that in the BCE non-compete agreement, there's a six month requirement. Have you had any contact from them about that agreement? Secondly, can you review briefly what the terms of those agreements are on the non-compete? KELVIN SHEPHERD, MTS Allstream: We continue to have discussions with Bell. Obviously we're closely aligned with them in terms of our respective mobility wireless businesses so we've had talks for quite a few months now. Those talks are continuing but neither party has moved to terminate the agreements and certainly I don't know what Bell might do. You would have to talk to them. I m unable to get into the details of those agreements. As you might expect they're fairly complex