MANITOBA TELECOM SERVICES INC. DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN

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1 MANITOBA TELECOM SERVICES INC. DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN MAY 12, 2010

2 SUMMARY Manitoba Telecom Services Inc. Dividend Reinvestment and Share Purchase Plan This is a summary of the features of Manitoba Telecom Services Inc. s Dividend Reinvestment and Share Purchase Plan. The Plan Document that follows this summary establishes the terms and conditions of the Plan. Shareholders should read the entire Plan Document carefully before making an enrollment decision. Participation in the Plan is only available to shareholders who are residents of Canada. Capitalized terms and acronyms used throughout this document are defined in the Plan Document. All references to dollar amounts are in Canadian dollars. What the Plan Offers The Plan allows eligible holders of our common shares to acquire additional common shares through the reinvestment of cash dividends paid on their respective shareholdings. The additional common shares will be purchased in the open market or will be newly issued by us from treasury at the Average Market Price or at a discount of up to 5% from the Average Market Price, all as determined by us. We will announce via press release and/or in dividend announcements whether purchases of common shares under the Plan will be made on the open market or from treasury. From time to time we will announce via press release the Applicable Discount, if any, to the Average Market Price, for common shares issued from treasury in connection with the reinvestment of dividends. The declaration and payment of any dividends is at the sole discretion of the Board of Directors. Participants in the Plan also have the option to make cash payments to purchase additional common shares. Cash payments shall not be less that $100 per transaction or greater than $20,000 per calendar year per Participant. The additional shares purchased using optional cash payments will be purchased in the open market or will be issued by us from treasury at 100% of the Average Market Price, all as determined by us. No Brokerage Commissions or Service Charges on Share Purchases Plan participants will not pay any brokerage commissions or service charges for share purchases made under the Plan. We will pay for all purchase costs associated with the administration of the Plan. Plan participants will also have the ability to have the Plan Agent sell common shares held under the Plan at a very reasonable cost to the Participant. Key Advantages of the Plan The key advantages of enrolling in the Plan are: 1. Convenience of having dividends automatically reinvested as common shares; 2. Ability to purchase additional common shares without having to pay brokerage commissions; 3. Ability to have the Plan Agent sell common shares at a very reasonable administrative cost; and 4. No service or administration charges for shares held under the Plan. i

3 Plan is Available to Shareholders Who are Residents of Canada All registered holders of our common shares who are residents of Canada may participate in the Plan. Non-registered Beneficial Shareholders (such as shareholders who hold their shares through a financial institution, broker, nominee or other intermediary) should consult their intermediary to determine the procedures for participation in the Plan. The administrative practices of intermediaries may vary and accordingly the various dates by which actions must be taken and documentary requirements set out in the Plan may not be the same as those required by intermediaries. Some intermediaries may require non-registered Beneficial Shareholders to become registered shareholders in order to participate in the Plan. Non-registered Beneficial Shareholders may have to become registered shareholders in order to make optional cash purchases. There may be a fee charged by some intermediaries for Beneficial Shareholders to become registered shareholders, and such fees will not be paid for by MTS or the Plan Agent. Record keeping Plan participants will receive statements quarterly by mail which will track investment activity. Participants will also receive an annual income tax reporting slip. How to join Eligible shareholders should first carefully read the Plan Document which follows. Then shareholders should complete the enrollment form and mail the completed enrollment form to the Plan Agent, Computershare Investor Services Inc. Questions Questions regarding the Plan should be directed to: Plan Agent Computershare Investor Services Inc. 100 University Avenue, 9 th floor Toronto, ON, Canada M5J 2Y1 Or by calling the National Customer Contact Centre at: Telephone: (Toll free in North America) or (514) Service@computershare.com You can contact us at: Manitoba Telecom Services Inc. Investor Relations 333 Main Street Winnipeg, MB, Canada R3C 3V6 Telephone: Fax: investor.relations@mtsallstream.com ii

4 MANITOBA TELECOM SERVICES INC. DIVIDEND REINVESTMENT AND SHARE PURCHASE PLAN PLAN DOCUMENT MAY 12, 2010

5 TABLE OF CONTENTS 1. DEFINITIONS EFFECTIVE DATE OVERVIEW WHO THE PLAN IS AVAILABLE TO HOW TO ENROLL HOW THE PLAN WORKS OPTIONAL CASH PAYMENTS WITHDRAWAL OR SALE OF SHARES FEES TAXES TERMINATION OF PARTICIPATION IN THE PLAN SUSPENSION OR TERMINATION OF THE PLAN BY MTS RESPONSIBILITIES OF MTS AND THE AGENT AMENDMENTS TO PLAN AND RIGHT TO MAKE RULES FEATURES RELATING TO THE SHARES HELD UNDER THE PLAN CONTACT INFORMATION...10

6 This is the Plan Document for Manitoba Telecom Services Inc. s Dividend Reinvestment and Share Purchase Plan. The Plan Document contains important details about the Plan and shareholders should read the entire Plan Document carefully before making an enrollment decision. Only residents of Canada may participate in the Plan. Capitalized terms and acronyms used throughout this document are defined below, under the heading, Definitions. All references to dollar amounts are in Canadian dollars. The use of short headings throughout this document is for convenience only. 1. DEFINITIONS In the Plan, the following terms have the meaning indicated: Applicable Discount: The discount on the Average Market Price that is applicable under the Plan for common shares issued from treasury in connection with the reinvestment of dividends as determined by MTS from time to time and ranging from 0% to 5%. MTS will notify Plan Participants of the Applicable Discount from time to time via press release and/or in dividend announcements. Average Market Price: When referring to the acquisition of newly issued shares from treasury under the Plan, the Average Market Price will be the volume weighted average trading price of the MTS common shares on the Toronto Stock Exchange for the five trading days immediately preceding the relevant Dividend Payment Date. When referring to the acquisition of common shares purchased on the open market under the Plan, the Average Market Price will be the average price paid by the Plan Agent for all such common shares so purchased, excluding for greater certainty brokerage commissions, fees and all transaction costs. Beneficial Shareholder: A person who is the beneficial owner, but not the registered owner, of MTS common shares (such as the owner of shares which are held in a brokerage account or a registered retirement savings plan but are registered in the name of a securities dealer or trustee). Board of Directors: The board of directors of MTS. Dividend Payment Date: The date chosen by the Board of Directors of MTS for the payment of a cash dividend on common shares. Dividend Record Date: The date declared by the Board of Directors of MTS to determine those shareholders entitled to receive payment of a corresponding dividend on common shares. MTS: Manitoba Telecom Services Inc., including its successors and assigns. Participant: A registered holder of common shares who has enrolled in the Plan. 1

7 Participant s Shares: All common shares registered in the name of the Participant which are enrolled in the Plan and all common shares held under the Plan by the Plan Agent on behalf of the Participant. Plan: Manitoba Telecom Services Inc. s Dividend Reinvestment and Share Purchase Plan. Plan Agent: Computershare Investor Services Inc. or such other agent as may be designated by MTS from time to time. Plan Document: This document, which establishes the terms governing Manitoba Telecom Services Inc. s Dividend Reinvestment and Share Purchase Plan, as it may be amended, modified or supplemented from time to time. 2. EFFECTIVE DATE The effective date of this Plan is May 12, OVERVIEW The Plan provides a convenient way for eligible holders of MTS common shares to increase their investment in MTS in a cost effective manner. Under the Plan, dividends paid on MTS common shares may be reinvested in MTS common shares without the payment of either brokerage commissions or service charges. The Plan allows eligible holders of common shares to acquire additional common shares through the reinvestment of any cash dividends paid on their respective shareholdings. Participants in the Plan also have the option to make cash payments to purchase additional common shares. Cash payments shall not be less than $100 per transaction or greater than $20,000 per calendar year per Participant. The Plan will continue to be in force until it is suspended or terminated by MTS. The declaration and payment of dividends is at the sole discretion of the Board of Directors. 4. WHO THE PLAN IS AVAILABLE TO Registered Shareholders Any registered shareholder of MTS common shares who is a resident of Canada may enroll in the Plan. Notice to Non-Registered Beneficial Holders of Common Shares Non-registered Beneficial Shareholders (such as shareholders who hold their shares through a financial institution, broker, nominee or other intermediary) should consult their intermediary to determine the procedures for participation in the Plan. The administrative practices of 2

8 intermediaries may vary and accordingly the various dates by which actions must be taken and documentary requirements set out in the Plan may not be the same as those required by intermediaries. Some intermediaries may require non-registered Beneficial Shareholders to become registered shareholders in order to participate in the Plan. Non-registered Beneficial Shareholders may have to become registered shareholders in order to make optional cash purchases. There may be a fee charged by some intermediaries for Beneficial Shareholders to become registered shareholders, and such fees will not be paid for by MTS or the Plan Agent. 5. HOW TO ENROLL Complete the Reinvestment Enrollment Participant Declaration Form and send it to the Plan Agent to initiate participation in the Plan. The enrollment form may be obtained in a number of ways: 1. a copy is attached to this Plan Document; 2. a copy can be obtained from the Plan Agent at the address listed under the heading, Contact Information ; or 3. online at Participation in the Plan will commence on the Dividend Record Date following receipt of the completed enrollment form by the Plan Agent, provided such enrollment form is received not less than five business days prior to such Dividend Record Date (and will otherwise commence on the next following Dividend Record Date). Once a shareholder has enrolled in the Plan, such shareholder s participation in the Plan is continuous until termination by such Participant or MTS with respect to a Participant from participation in the Plan, or termination of the Plan by MTS. 6. HOW THE PLAN WORKS Plan Agent Administers Plan The Plan will be administered on behalf of MTS by the Plan Agent. The Plan Agent will receive the payments under the Plan and will purchase and hold the common shares acquired under the Plan. All stock exchange purchases made pursuant to the Plan will be made by the Plan Agent on such terms as to cost, delivery and otherwise as the Plan Agent may determine. On a Dividend Payment Date, any cash dividends payable on the Participant s Shares will be paid by MTS to the Plan Agent. The Plan Agent will use those funds to purchase MTS common shares. The shares will, at the election of MTS, be either newly issued from treasury and purchased directly from MTS, or outstanding shares purchased on the open market. The funds from the issuance from treasury of any common shares under the Plan will be used by MTS for general corporate purposes. 3

9 Cost of Shares Acquired Under the Plan The cost to the Participant for the common shares acquired under the Plan on the reinvestment of cash dividends is the Average Market Price less any Applicable Discount. MTS will announce via press release and/or in any dividend announcements whether purchases of common shares under the Plan will be made on the open market or from treasury and the Applicable Discount, if any, to the Average Market Price, for common shares issued from treasury in connection with the reinvestment of dividends. The price at which the Plan Agent will purchase common shares on the open market will be equal to 100% of the Average Market Price in all cases. Accounts Maintained by Plan Agent An individual account is maintained by the Plan Agent for each Participant s holdings under the Plan. All common shares acquired for a Participant under the Plan will be registered in the name of the Plan Agent and held by the Plan Agent on behalf of the Participant in the Participant s account. Fractional as well as whole shares are acquired and held in this way. Fractions will be computed to six decimal places. The rounding of any fractional interest shall be determined by the Plan Agent using such methods as it deems appropriate in the circumstances. Certificates are not issued to Participants for shares held under the Plan. Once a Participant is enrolled in the Plan, any future dividends on all of the Participant s shares, whether held at the time of enrollment in the Plan or acquired subsequently, are reinvested under the Plan. Once a shareholder has enrolled in the Plan, such shareholder s participation in the Plan is continuous until termination by such Participant or MTS with respect to a Participant from participation in the Plan, or termination by the Plan by MTS. An account statement is mailed to each Participant quarterly (or at such other frequency as determined by MTS). These statements are a record of a Participant s investment activity under the Plan, and should be retained for income tax purposes. Participants will also receive annual income tax slips. No Fixed Number of Shares Available or Fixed Time Period There is no fixed number of common shares available under the Plan, nor is there a fixed time period during which shareholders may purchase shares under the Plan. 7. OPTIONAL CASH PAYMENTS Participants may purchase additional common shares under the Plan by making cash payments. This option is available to Participants provided that optional cash payments made by any Participant shall not be less than $100 per transaction or greater than $20,000 per calendar year. An optional cash payment may be made by submitting a personal cheque together with a duly completed Optional Cash Participant Declaration Form, a copy of which will be sent to Participants with each quarterly statement. Participants may also obtain a copy of the optional cash payment form by contacting the Plan Agent at the address listed under the heading, Contact 4

10 Information. A Participant is not obligated to make optional cash payments at any time nor are they obligated to send the same amount of money with each optional cash payment form. On each Dividend Payment Date optional cash payments received by the Plan Agent from Participants not less than five business days prior to such Dividend Payment Date will be applied by the Plan Agent to the purchase of common shares. Optional cash payments received by the Plan Agent later than five business days preceding a Dividend Payment Date will be held by the Plan Agent until the next Dividend Payment Date. No interest will be paid by MTS or the Plan Agent on any funds received for optional cash payments. The additional shares purchased using optional cash payments will be purchased in the open market or will be issued by MTS from treasury at 100% of the Average Market Price, all as determined by MTS. Cash dividends on shares purchased with optional cash payments will automatically be reinvested in accordance with the Plan. 8. WITHDRAWAL OR SALE OF SHARES A Participant who wishes to withdraw or sell any number of whole common shares held for that Participant under the Plan and without terminating their participation in the Plan, may do so by duly completing the withdrawal portion of the voucher located on the reverse of the statement of account. Upon receipt of a withdrawal request, the Plan Agent will withdraw or sell the specified number of whole shares from the Participant s account and deliver a share certificate in the Participant s name or a cheque for the sale less any transaction fees. Certificates will not be issued for fractional shares. The Plan Agent will generally issue certificates to a Participant within three weeks of receipt of the withdrawal request form. A request for withdrawal will not affect the participation of the shares withdrawn provided that the shares remain the Participant s shares, nor will it affect the participation of the remaining shares held under the Plan. Common shares that are to be sold for a Participant may be commingled with common shares of other Participants requesting a sale of shares under the Plan, in which case the proceeds to each Participant will be based on the average sale prices and the average brokerage commissions of all common shares so commingled. 9. FEES There are no brokerage commissions or service charges payable by Participants with respect to the purchase, receipt, or administration of common shares under the Plan. All such costs, including the Plan Agent s fees and expenses, are paid by MTS. Fees for the sale of common shares within the Plan are to be paid by the Participant. Fees and commissions will be set by the Plan Agent from time to time and without notice to the Participants. 5

11 10. TAXES Participants are urged to consult their tax advisors as to their specific tax circumstances. Participants Resident in Canada The fact that dividends are reinvested under the Plan does not affect the taxability of dividends to the Participant. All dividends reinvested under the Plan will be subject to the same tax treatment accorded to cash dividends received by the Participant. A Participant will not realize any taxable income solely because of the receipt of certificates for whole shares accumulated by a Participant under the Plan. A Participant may realize a gain or loss when shares held under the Plan are withdrawn and sold. Plan Not Available to Shareholders Outside of Canada Participation in the Plan is only available to shareholders who are residents of Canada. 11. TERMINATION OF PARTICIPATION IN THE PLAN Automatic Termination of Participation in the Plan Participation in the Plan will automatically terminate upon: 1. the disposition of all of a Participant s shares; or 2. receipt by the Plan Agent of notice of the death of a Participant along with satisfactory evidence of the appointment of, and authority to act as, the representative of the deceased Participant. The Plan Agent has discretion as to the form of notice and what evidence will be required. Termination by Participant of Participation in the Plan Participants may terminate their participation in the Plan at any time by duly completing the termination portion of the voucher on the reverse of the statement of account and sending it to the Plan Agent. If a Participant requires an additional copy of the voucher they may obtain a duplicate copy of their statement of account from the Plan Agent at the address listed under the heading, Contact Information. If notice of termination is not received by the Plan Agent at least five (5) business days prior to a Dividend Record Date settlement of the Participant's account will not commence until after the corresponding Dividend Payment Date. 6

12 Termination by MTS of Participation in the Plan MTS reserves the right to terminate a Participant s participation in the Plan: 1. with prior written notice where a Participant s account is deemed by MTS, in its sole discretion, to be inactive, or where such Participant holds less than one common share of MTS over a period of twelve consecutive months; or 2. without prior notice where such Participant has, in the sole discretion of MTS, abused the Plan to the detriment of MTS or its shareholders. What Happens Upon Automatic Termination or Termination by Participant or MTS of Participation in the Plan Where the Plan Agent has received notice of the death of a Participant, a certificate for the Participant s whole common shares held by the Plan Agent under the Plan, as well as a cheque representing payment for any fraction of a common share held in their account and the return of any applicable uninvested, optional cash payments, will be issued in the name of the deceased participant or in the name of the estate of the deceased participant, as requested. The certificate and applicable cash payment will be sent to the estate of the deceased Participant. Upon termination of participation in the Plan, a Participant will receive a certificate for the whole common shares in their account, a cheque representing payment for any fraction of a common share held in their account and the return of any uninvested optional cash payments. The cash payment for a fractional share interest will, in each case, be calculated on the basis of the closing price for a board lot (100 shares) of MTS common shares on the Toronto Stock Exchange on the trading day immediately prior to the date of termination. Plan accounts are maintained in the names in which certificates were registered at the time the Participant enrolled in this Plan. Consequently, certificates for whole shares withdrawn from this Plan will be registered in exactly the same manner when issued. A terminating Participant may direct the Plan Agent to sell all the common shares, (both whole common shares and any fraction of a share), credited to such Participant s account under the Plan. In this event, the Plan Agent will sell such shares through a stock broker designated by the Plan Agent as soon as reasonably practicable following receipt by the Plan Agent of notice of termination. The proceeds of such sale, less brokerage commissions, administrative fees and applicable taxes, if any, will be paid to the terminating participant by the Plan Agent together with a cash payment for any fraction of a share held in such Participant s account. Common shares that are sold may be commingled with common shares of other Participants requesting a sale of shares under the Plan, in which case the proceeds to each Participant will be based on the average sale prices and the average brokerage commissions of all shares so commingled. After termination of participation in this Plan, all dividends will be paid to the registered holder of the shares by cheque. 7

13 12. SUSPENSION OR TERMINATION OF THE PLAN BY MTS MTS reserves the right to suspend or terminate the Plan at any time and for any reason, but such actions shall have no retroactive effect that would prejudice the then-existing interests of the Participants. All affected Participants will be sent written notice of suspension or termination of the Plan. Suspension of Plan In the event of suspension of the Plan, no dividend reinvestments or investments will be made under the Plan from and including the effective date of such suspension. Any cash dividends received on or after the effective date of suspension will be sent to the Participants in cash, and any optional cash payments which are not invested as of the effective date of suspension will be remitted to the applicable Participants without interest. Termination of Plan In the event of termination of the Plan, the Plan Agent will promptly send each Participant a certificate representing the whole common shares held for each Participant under the Plan and a cash payment for any fractional share interest, and will remit as applicable cash payments for any uninvested optional cash payments. The cash payment for a fractional share interest will be calculated on the basis of the closing price for a board lot (100 shares) of MTS common shares on the Toronto Stock Exchange on the trading day immediately prior to the date of termination. 13. RESPONSIBILITIES OF MTS AND THE AGENT Neither MTS nor the Plan Agent shall be liable for any act or for any omission to act in connection with the operation of the Plan including, without limitation, any claims of liability: 1. arising out of failure to terminate a Participant s account upon such Participant s death prior to receipt of notice in writing of such death; 2. with respect to the prices at which common shares are issued or purchased or at which common shares are sold for the Participant s account and the times such purchases or sales are made; 3. relating to the tax liability of the Participant, or any withholding or any non-resident taxes; or 4. actions taken as a result of inaccurate and incomplete information or instructions. Purchases made on the open market are the responsibility and shall be made at the sole discretion of the Plan Agent. The declaration and payment of dividends is at the sole discretion of the Board of Directors. 8

14 Participants should recognize that neither MTS nor the Plan Agent can assure a profit or protect them against a loss on the common shares issued pursuant to or purchased under the Plan. Any act in connection with the operation of the Plan will only be carried out by MTS and/or the Plan Agent if such act is in accordance with applicable law. 14. AMENDMENTS TO PLAN AND RIGHT TO MAKE RULES MTS reserves the right to amend or vary the terms and conditions of the Plan at any time and for any reason, but such actions shall have no retroactive effect that would materially prejudice the thenexisting interests of the Participants. All amendments to the Plan will be subject to the prior approval of the Toronto Stock Exchange. Participants will be informed of any changes to the Applicable Discount by press release and/or in dividend announcements. MTS and the Plan Agent may make rules and regulations not inconsistent with the terms of the Plan in order to improve the administration of the Plan. 15. FEATURES RELATING TO THE SHARES HELD UNDER THE PLAN The Rights Attached to Common Shares The securities to be purchased under the Plan are common shares of MTS. The holders of common shares of MTS have the right to receive notice of, and attend and vote at, meetings of shareholders, to receive any such dividends as may be declared by the Board of Directors of MTS, and to share in the distribution of the assets of MTS upon liquidation, winding-up or dissolution, subject to the rights, privileges and conditions attaching to any other class of shares ranking in priority thereto. Voting of Shares Held Under the Plan Voting of all whole common shares held in the Participant s account under the Plan will be voted in accordance with each Participant s proxy. Common shares for which a proxy is not received will not be voted. Fractional common shares cannot be voted by the Participant. No Pledge of Shares Held Under the Plan Participants may not pledge, sell, or otherwise dispose of shares which are held for the Participant by the Plan Agent under the Plan. A Participant who wishes to pledge, sell or otherwise dispose of such shares must request that certificates for such shares be issued. Rights Offerings and Shares Held Under the Plan If MTS issues rights to its common shareholders to subscribe for additional common shares or other securities, then rights certificates in respect of whole rights will be issued by MTS to each Participant in respect of the whole common shares held for the Participant under the Plan on the record date for the rights issue. 9

15 Stock Splits and Stock Dividends and Shares Held Under the Plan If common shares or any other securities or property is distributed pursuant to a stock split or stock dividend or any other form of in specie distribution on the common shares of MTS, such common shares or other securities or property received by the Plan Agent for Participants under the Plan will, in the case of a distribution of common shares, be retained by the Plan Agent and credited proportionately to Participants respective accounts, and in the case of other securities or property, be further distributed to Participants based on their respective entitlement thereto. 16. CONTACT INFORMATION Notices to Participants shall be mailed to them at the addresses shown on the records of the Plan. Notices to the Plan Agent shall be sent to: Computershare Investor Services Inc. 100 University Avenue, 9 th floor Toronto, ON, Canada M5J 2Y1 Attention: Dividend Reinvestment Department Or by calling the National Customer Contact Centre at: (Toll free in North America) or (514) service@computershare.com. Correspondence with MTS regarding the Plan should be sent to: Manitoba Telecom Services Inc. Investor Relations 333 Main Street Winnipeg, MB, Canada R3C 3V6 Telephone: Fax: investor.relations@mtsallstream.com Questions relating to this Plan should be directed to the Plan Agent 10

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