ALASKA COMMUNICATIONS OVERVIEW

Transcription

1 1 Alaska Communications ALASKA COMMUNICATIONS OVERVIEW June 2013

2 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 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 ACS' business, please refer to the Alaska Communications SEC filings, including, but not limited to, our annual report on Form 10-K for the fiscal year ended December 31, 2012, 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. 2 Alaska Communications

3 ALASKA: A UNIQUE OPERATING ENVIRONMENT 3 Alaska Communications

4 ENORMOUS SPACES, SPARSELY POPULATED Geographically Vast 570,640 square miles of land represents 16.2% of all U.S. land area. 6,640 miles of coastline, more than 50% of the entire U.S. The state of Alaska is the largest state in the U.S. - more than twice as large as the next largest, Texas. Not only is Mt. McKinley the highest mountain in North America, but Alaska has 15 other peaks higher than any in the continental U.S. A Dispersed People 2012 population of 731,449, less than 0.25% of the U.S. total population. Lowest population density of all states in the U.S. with 1.2 residents per square mile. The next closest is Wyoming with The U.S. average is Source: U.S. Census Bureau, Source: U.S. Census Bureau, Alaska is a state with a small population of 731,449 spread out over a vast geographic region. 4 Alaska Communications

5 UNIQUE LOCATION WITH A STRONG ECONOMY STABLE ECONOMY The 2012 Gross State Product was roughly $53 billion. Alaska GDP per capita is $65,143, 3 rd highest in the U.S. and 37% higher than the U.S. average. Lower unemployment than the U.S. average. With nearly $43 billion in assets, The Permanent Fund is one of the world s 10 largest sovereign funds. PROXIMITY TO GLOBAL MARKETS Sapporo, Japan is closer than New York. The distance from Anchorage to Atlanta, GA is comparable to the distance to Reykjavik, Iceland. Anchorage has the 5 th busiest airport, worldwide, in terms of air cargo traffic. Source: Google Maps, straight line distances Unemployment Rates, Alaska and U.S. January 2003 to March 2013 Source: Department of Labor and Workforce Development Source: NEI Estimates, Alaska Communications

6 ABUNDANT NATURAL RESOURCES OIL, GAS, AND MINING 4 th largest oil producing state, accounting for roughly 10% of U.S. oil production. 85% of Alaska s state government revenue comes from oil tax revenues. Alaska s mining industry produces zinc, lead, copper, gold, silver, coal, resulting in 18,000 jobs and an industry value of approximately $4.4 billion. Alaska s Resource Extraction Jobs (2002 to Present) FISHING AND FORESTRY Approximately $1.3 billion in fish and shellfish were harvested from Alaska waters in 2009 first overall among states for value of landings and 50% of the total U.S. annual catch. The seafood processing industry generates 10,000 jobs. Alaska has over 129 million forested acres across the state. Source: AEDC 2013 Resource Extraction Report: 10 year projection Combined Oil & Gas and Mining Construction / Exploration Project Investments Source: AEDC 2013 Resource Extraction Report: 10 year projection 6 Alaska Communications

7 OUR COMPANY AND OUR HISTORY 7 Alaska Communications

8 A FEW MILESTONES IN OUR 120 YEAR HISTORY 1893 The Juneau and Douglas Telephone Company begins operations Anchorage Telephone Utility begins operations Telephone Utilities of the Northland begins operations Alaska Communications Systems Group, Inc., (ACS), now Alaska Communications, is formed ACS completes an initial public offering of stock to become the state s first statewide telecommunications company ACS acquires Internet Alaska Inc., the second largest Internet service provider in Alaska ACS acquires the Northstar submarine cable, and builds AKORN, giving Alaska diverse submarine routes to the LOWER ACS becomes Alaska Communications Alaska Communications launches the Alaska Wireless Network joint venture with GCI. 8 Alaska Communications

9 OUR PURPOSE AND CUSTOMER PROMISE 9 Alaska Communications

10 A TRACK RECORD OF INNOVATION FOR DECADES, WE VE BEEN INVESTING IN TECHNOLOGY TO SUPPORT ALASKA. OUR CYCLE OF INNOVATION HAS ACCELERATED IN THE LAST FIVE YEARS st Internet Service Provider in Alaska is founded (acquired by Alaska Communications in 2000) st in the state to launch Metro Ethernet st in the state to launch MPLS (Multi-Protocol Label Switching) st to launch 3G Network in Alaska st to offer geographically diverse connectivity to the L48 tripling the bandwidth leaving the state st to launch Android powered devices in Alaska st to launch 4G LTE in Anchorage, Fairbanks and Juneau st to launch Virtual Private LAN Services (VPLS) st in Alaska, second in the USA, third in the world to achieve Carrier Ethernet 2.0 certification for reliable, scalable and secure business data services. See The Most Important Place on Earth 10 Alaska Communications

11 OUR PEOPLE WHO WE ARE A TEAM OF SERVICE PROFESSIONALS CONNECTED TO OUR COMMUNITY Over 800 employees predominantly in Alaska. For decades we have helped build the infrastructure that connected Alaska, as the local exchange carrier in over 70 communities. Corporate headquarters in Anchorage, three regional offices (Soldotna, Fairbanks, Juneau) and Lower 48 regional offices in Hillsboro, OR. Hear from our employees A large majority of our employees are represented by the Local IBEW 1547 with whom we enjoy a strong and productive partnership. 11 Alaska Communications

12 OUR CUSTOMERS 12 Alaska Communications

13 CLIENTS IN ALASKA AND BEYOND PROUD TO SERVE ORGANIZATIONS DOING BUSINESS IN ALASKA AND BEYOND. 13 Alaska Communications

14 DEMONSTRATED PERFORMANCE RELIABILITY: Support their IT Director by hosting, managing and connecting their entire IT infrastructure in a private cloud, serving 22 locations and 2,000 employees statewide. Reliability is number one it s there. We don t lose data, we don t lose connectivity. So, I m no longer a fireman. I m retired as a fireman. Charles Shaw IT Director Nana Management Services CUSTOMER SERVICE: Provide robust MPLS based communications to 12 locations and 300 employees in AK and OR. Configured and installed a new circuit in less than one day after a natural disaster. If you look up the definition of incredible customer service, it will have a picture of Alaska Communications. Mike Grueber Regional Telecommunications Manager National Oceanic & Atmospheric Administration CAPABILITY: Provide managed network and video conferencing services to a network of small, rural, and remote hospitals and clinics across Alaska serving 50% of rural Alaskans via telemedicine and teleradiology. Alaska Communications' proven track record for outstanding customer service, managing complex data networks, high-definition videoconferencing capabilities, and expansive medical networks in Alaska and the Lower 48 made Alaska Communications the ideal partner for us. Karen Perdue President and CEO Alaska State Hospital and Nursing Home Association 14 Alaska Communications

15 DEMONSTRATED PERFORMANCE TRUST: Support the university s effort to ensure business continuity for 32,000 students and 8,000 faculty and staff by providing secure off-site data backup and connectivity between Fairbanks, AK and our data center in Hillsboro, OR. With the use of online technology as the dominant method of conducting the university s business, everything from human resources to student grades, it s essential we have a solid business continuity plan with no single point of failure. This takes care of our biggest single vulnerability with our online services and is possible thanks to our partnership with Alaska Communications. Steve Smith Chief Information Officer University of Alaska PERFORMANCE: Constructed ground based wireless network to power GoGo inflight entertainment for Alaska air travelers from Fairbanks to Ketchikan. Alaska Communications network performance is exceeding our expectations and is consistently rock solid. Their provisioning is extremely dynamic in that they are able to add capacity in a matter of days and their monthly network review meeting includes comprehensive performance reports and analysis Jim Naumann Director Network Engineering Aircell 15 Alaska Communications

16 OUR SERVICES AND CAPABILITIES 16 Alaska Communications

17 WITH AWN, THE MOST ADVANCED AND EXTENSIVE WIRELESS NETWORK IN ALASKA PREMIER NETWORK Over 300 cell sites in virtually every rural and urban location Extensive Wi-Fi network in urban markets. 4G LTE (GSM) Network Coverage DEVICES FROM TOP MANUFACTURERS Wireless phones. Fixed broadband wireless routers serving communities across the state and up to 10Mbps of broadband speeds. Mobile broadband wireless dongles and MiFis including 4G LTE wireless routers. PLANS FOR EVERY PURPOSE Data plans, minutes plans, business minute bucket plans, and family plans. 17 Alaska Communications

18 WORLD CLASS ETHERNET FOR ALASKA CARRIER ETHERNET 1.0 CERTIFIED PROVIDERS WORLDWIDE QUALITY OF SERVICE STANDARDIZED SERVICES MERICA SERVICE MANAGEMENT CARRIER ETHERNET SCALABILITY RELIABILITY CARRIER ETHERNET 2.0 CERTIFIED PROVIDERS WORLDWIDE Alaska Communications is the first company in Alaska, the second in the U.S., and third in the world to become a certified Carrier Ethernet 2.0 (CE 2.0) carrier through the Metro Ethernet Forum (MEF), a global industry alliance that defines carrier-class Ethernet networks. April Alaska Communications

19 BROADBAND NETWORKS BUILT FOR ALASKA RELIABILITY IS CORE TO ALL WE DO Alaska s only provider offering VPLS and MPLS to Alaska businesses. Guaranteed reliability through three levels of Ethernet services. Alaska s only Carrier Ethernet 2.0 certified provider meaning standardized services, SLAs and QOS, scalability, reliability and service management. More businesses connected than any other carrier in Alaska. THE POWER OF TWO RESILIENCY IS BUILT IN Two metro area fiber paths between Anchorage and Fairbanks. Two paths to the North Slope. Two Integrated Network Management Centers (INMCs). Two connections to the Internet (Seattle and Portland). Two fiber paths in Oregon and Washington State. Two submarine cables connecting Alaska to Lower 48. We own and operate two of the four cables into Alaska, and have the most survivable fiber optic system (AKORN and Northstar). Take a tour of our Integrated Network Management Center WE CONNECT GLOBALLY Our Pacific Northwest Integrated Network Management Center manages a significant percentage of all data traffic between North America and Asia. Abundant carrier interconnections to ensure global reach. 19 Alaska Communications

20 BUSINESS SOLUTIONS A COMPREHENSIVE RANGE OF IT AND TELECOMMUNICATIONS SOLUTIONS FOR BUSINESSES OPERATING IN ALASKA. ALASKA COMMUNICATIONS BUSINESS SERVICES IT SOLUTIONS DATA INTERNET WIRELESS VOICE ConstantlyOn IT (Helpdesk support) OnSite IT (Break/Fix support) Professional Services IT Equipment Hosted Colocation Business Ethernet Metro Ethernet Enhanced Metro Ethernet Enhanced Ethernet Services MPLS VPLS Private Line (e.g. T1) Data Backup Business Internet Internet Over Ethernet Dedicated Internet Access Mobile Broadband Wireless Phones, Routers, and Mobile Broadband Devices Fleet Management Custom wireless and telemetry solutions VOIP (Cisco and Polycom) DSS / PRI / BRI Centrex Local and Long Distance PBX solutions (Mitel and Avaya) Click here for more information on our IT solutions Click here for more information on our Data Services Click here for more information on our Internet services Click here for more information on our wireless services Click here for more information on our voice services 20 Alaska Communications

21 CONSUMER SERVICES The Incumbent Local Exchange Carrier (ILEC) in 73 communities, Alaska Communications offers Alaskan consumers a variety of Wireless and Wireline services. ALASKA COMMUNICATIONS CONSUMER SERVICES WIRELESS Mobile Voice Mobile Broadband Data Postpaid, Prepaid, Lifeline VOICE Local Long Distance International INTERNET Dedicated Home Internet Mobile Broadband Click here for more information on our wireless solutions Click here for more information on our voice solutions Click here for more information on our Internet solutions 21 Alaska Communications

22 OUR BUSINESS PERFORMANCE 22 Alaska Communications

23 Revenue ($ in millions) A $1 BILLION A YEAR (AND GROWING) MARKET The demand for our products is growing, we are under-penetrated in our markets, and are investing in our network and service to profitably grow our top line. Growing retail broadband revenues and deleveraging our balance sheet is how we intend to create long-term shareholder value. $1,500 Growth in Alaska Retail Telecom Consumer SMB Enterprise $1.4 CAGR $1.1 $397 6% $1,000 $305 $857 $500 $626 $321 $460 9% $460 $550 5% $0 Source: Company sponsored research Alaska Communications sees an opportunity to profitably grow top-line revenues both by gaining share and growing as the market expands. 23 Alaska Communications

24 year-over-year growth (%) PERFORMING TO OUR BUSINESS PLAN 2012 was the first full year of performing to the business plan outlined a year ago. Our results speak to our ability to perform: 2012 retail broadband revenues grew across the board 11% for Business broadband ($30.7M to $33.9M), 8% for Consumer broadband ($17M to $18.4M); and 17% for Wireless broadband ($20.9M to $24.4M). We paid down $19.5M in long term for the year 2012, marking the first time in several years that we reduced debt balances. 25% 20% 15% 10% 5% 0% Retail Broadband Revenue Growth FY 2012 Q Business Consumer Wireless We continued our performance into the first quarter of 2013, performing to our business plan with consistency. Comparing Q to Q1 2012: Again, retail broadband revenues grew across the board 17% for Business broadband ($8.1M to $9.5M); 21% for Consumer broadband ($4.3M to $5.2M); and 21% for Wireless broadband ($5.6M to $6.8M). Through April 2013 we paid down $20M in long term debt achieving in the first 4 months of the year what we did in all of Further we have indicated that for the full year 2013 we intend to pay down close to $100M in long term debt. We see an opportunity to grow profitably, we have great people and a strong brand, we are performing to our plan by delivering solid retail broadband revenue performance, all while deleveraging and strengthening our balance sheet. 24 Alaska Communications

25 THANK YOU 25 Alaska Communications