Notice - Bell MTS · This presentation contains certain forward-looking statements and there are ... Basic plus 6 channels & full high-speed Internet $69.95 per month ($10 savings)

1

NoticeNotice

This presentation contains certain forward-looking statements and there are

risks that actual results may differ materially from those contemplated by

these forward-looking statements. Readers should consult Manitoba

Telecom Services Inc.’s filings with the Canadian securities commissions for

further information on these risks.






2

IntroductionIntroduction

Brad WoodsBrad WoodsDirector Investor RelationsDirector Investor RelationsDirector Investor RelationsDirector Investor RelationsDirector Investor RelationsDirector Investor RelationsDirector Investor RelationsDirector Investor Relations

Wayne DemkeyWayne DemkeyExecutive ViceExecutive ViceExecutive ViceExecutive Vice----President Finance & CFOPresident Finance & CFOPresident Finance & CFOPresident Finance & CFOExecutive ViceExecutive ViceExecutive ViceExecutive Vice----President Finance & CFOPresident Finance & CFOPresident Finance & CFOPresident Finance & CFO

Bill FraserBill FraserPresident & CEOPresident & CEOPresident & CEOPresident & CEOPresident & CEOPresident & CEOPresident & CEOPresident & CEO

President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc President & COO MTS Communications Inc

Cheryl BarkerCheryl Barker

Strategic PositionStrategic Position

Dominant Position in Manitoba

Strong & Growing Cash Flows

Industry-Leading Profitability

Excellent Financial Flexibility

Bell West Put Option

Dominant Position in Manitoba

Strong & Growing Cash Flows

Industry-Leading Profitability

Excellent Financial Flexibility

Bell West Put Option

3

MTS StrategyMTS Strategy

TRANSFORMTRANSFORMTRANSFORMTRANSFORMTRANSFORMTRANSFORMTRANSFORMTRANSFORM

EXPANDEXPANDEXPANDEXPANDEXPANDEXPANDEXPANDEXPAND

DEFENDDEFENDDEFENDDEFENDDEFENDDEFENDDEFENDDEFEND

Strategic ElementsStrategic ElementsDefend

LocalLong DistanceDirectory

TransformWirelessInternet

ExpandDigital TV

DefendLocalLong DistanceDirectory

TransformWirelessInternet

ExpandDigital TV

4

Full Service ProviderFull Service Provider

Brand RecognitionBrand Recognition

Pervasive InfrastructurePervasive Infrastructure

Defendable MarketDefendable Market

Customer Ownership/RelationshipCustomer Ownership/Relationship

Leadership Position - ManitobaLeadership Position - ManitobaThe MTS Advantage

Leadership Position - ManitobaLeadership Position - Manitoba

Market Share*Market Share*

68%68%WirelessWireless

55%55%Internet**Internet**

97%97%LocalLocal

76%76%Long DistanceLong Distance

Lines of Business

* December31, 2003 **Combined high-speed & dial-up* December31, 2003 **Combined high-speed & dial-up

5

Core Lines of BusinessCore Lines of Business

00

200,000200,000

400,000400,000

600,000600,000

800,000800,000

1,000,0001,000,000

1,200,0001,200,000

Revenue Generating Units

Q4 2000 Q4 2001 Q4 2002 Q4 2003

NAS Wireless Internet TV

Q4 2000 Q4 2001 Q4 2002 Q4 2003

NAS Wireless Internet TV

WirelessWireless

(%)

Growth Growth

7.0

11.613.9

16.017.722.1

13.49.2

2000 2001 2002 2003

Revenue Customers

6

WirelessWirelessARPU*ARPU*

Three months ended Sept 30th, 2003 *Average monthly revenue per customerThree months ended Sept 30th, 2003 *Average monthly revenue per customer

$49 $50 $50$60$56

Aliant RogersAT&T

BellCanada

MTS TelusMobility

Wireless Wireless

1.1% 1.3%1.8%

MTS Bell Canada Rogers AT&T

1.1% 1.3%1.8%

MTS Bell Canada Rogers AT&T

Postpaid Churn Rate*

*Nine months ended Sept 30th, 2003.*Nine months ended Sept 30th, 2003.

7

Extensive Network Coverage

Extensive Network Coverage

96%of population

96%of population

WirelessWirelessManitoba Network

CDMA 800 MHz -- Winnipeg, Brandon & secondary locationsCDMA 1.9 GHz -- WinnipegDigital network supports wireless data applications

CDMA 800 MHz -- Winnipeg, Brandon & secondary locationsCDMA 1.9 GHz -- WinnipegDigital network supports wireless data applications

Increased penetrationWireless Data

Launched 1xRTT Q4/02 in WinnipegAllows for data transmission speeds up to 144 kbs; facilitates improvements in voice efficienciesText messaging, downloadable ring tones, Camera phones, games

Increased penetrationWireless Data

Launched 1xRTT Q4/02 in WinnipegAllows for data transmission speeds up to 144 kbs; facilitates improvements in voice efficienciesText messaging, downloadable ring tones, Camera phones, games

WirelessWirelessFuture Growth Drivers

8

WirelessWireless

43%36%32%

Manitoba2003

Manitoba2004

Canada2004

43%36%32%

Manitoba2003

Manitoba2004

Canada2004

Penetration Rates

Broadband InitiativeBroadband Initiative

Bandwidth enhancements for business & residential customersMatching investment to customer demandMajor win; Manitoba government data network

$50 M over 5 years; opportunity to expandHigh-speed Network Footprint

Manitoba – 79%Winnipeg & Brandon – 96%

Bandwidth enhancements for business & residential customersMatching investment to customer demandMajor win; Manitoba government data network

$50 M over 5 years; opportunity to expandHigh-speed Network Footprint

Manitoba – 79%Winnipeg & Brandon – 96%

9

High-Speed InternetHigh-Speed InternetMarket Share*

20022002

42%42% 46%46%

*At December 3120032003

11,157

61,628

34,015

77,643

2000 2001 2002 2003

11,157

61,628

34,015

77,643

2000 2001 2002 2003

High-Speed Internet High-Speed Internet

2004E Mid-Teen Growth2004E Mid-Teen Growth

*At December 31

Customers *

10

Internet RevenuesInternet Revenues

14.620.8

26.8

44.836.0

1999 2000 2001 2002 2003

14.620.8

26.8

44.836.0

1999 2000 2001 2002 2003

($ Millions)($ Millions)

24%24%

High-Speed Service OfferingsHigh-Speed Service Offerings

ResidentialResidential$26.95$26.95DSL Starter Plan (128 Kbps)DSL Starter Plan (128 Kbps)

DSL High-Speed (up to 1.5 mbps)DSL High-Speed (up to 1.5 mbps)

Price/MonthPrice/Month

$39.95$39.95

BusinessBusiness$69.95-$139.95$69.95-$139.95Professional (up to 5.0 mbps)Professional (up to 5.0 mbps)

Network* (up to 5.0 mbps)Network* (up to 5.0 mbps)

Price/MonthPrice/Month

$119.95-$219.95$119.95-$219.95

* Includes router to create high-speed network connection* Includes router to create high-speed network connection

11

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

$200

$220

VOD

Digital TV

Telephony• Basic Local• Enhanced • Long Distance• Wireless

Internet• HSI

Interactive Entertainment

Broadband – Growing Opportunities

Mon

thly

Rev

enue

Per

Cus

tom

er

Profitable growth opportunityFirst to market triple play:

Voice, Internet & TelevisionExcellent value propositionLeverages existing network, back office & brand strength Customer demand for alternative provider

Profitable growth opportunityFirst to market triple play:

Voice, Internet & TelevisionExcellent value propositionLeverages existing network, back office & brand strength Customer demand for alternative provider

Digital Television OpportunityDigital Television OpportunityRationale

12

Digital Television

WinnipegQ3 2003WinnipegQ3 2003

Winnipeg TV Market DistributionWinnipeg TV Market Distribution

CableCable

59%59%

Cable + Cable + SatelliteSatellite3%3%

No TVNo TV3%3%

AntennaAntenna6%6%

SatelliteSatellite9%9%

Digital Digital Wire lineWire line20%20%

Analog Analog

Market SizeMarket Size $100M+$100M+

MTS TVMTS TVOver 200 TV channels currentlySingle set-top box

Three simultaneous video signalsHigh-speed Internet through same box

On-screen calling featuresFully digitalMTS PortalInteractive guide

Over 200 TV channels currentlySingle set-top box

Three simultaneous video signalsHigh-speed Internet through same box

On-screen calling featuresFully digitalMTS PortalInteractive guide

13

MTS TV / High-Speed Internet Bundle Basic plus 6 channels & full high-speed Internet$69.95 per month ($10 savings)Launched October 2003

MTS TV customers with High-Speed Internet:

Sept 30, 2003 - 44%Dec 31, 2003 – 49%

MTS TV / High-Speed Internet Bundle Basic plus 6 channels & full high-speed Internet$69.95 per month ($10 savings)Launched October 2003

MTS TV customers with High-Speed Internet:

Sept 30, 2003 - 44%Dec 31, 2003 – 49%

Digital TelevisionDigital Television

Digital TelevisionDigital TelevisionCustomersCustomers

26,000-28,00026,000-28,000

2004,809

8,693

Jan 2003 Sept 2003 Dec 2003 2004E

14


20032003

2004E2004E

Network Coverage Targets*Network Coverage Targets*

42%42%

66%66%

2005E2005E 85%85%

20022002 9%9%

*Percentage of Winnipeg at Dec 31st*Percentage of Winnipeg at Dec 31st


EBITDA PositiveEBITDA Positive

Financial ProjectionsFinancial Projections

2004 Revenues2004 Revenues

Net Income PositiveNet Income Positive 20052005

$12-$14 M$12-$14 M

20052005

15

Exercised February 2, 2004 Estimated proceeds of $645 million

Pretax gain in Q1/04 of $230 millionTax estimated at $43 million

Attractiveness of the Return24% on Bell Intrigna transaction8% on all Bell West funding

Proceeds due by August 3, 2004

Exercised February 2, 2004 Estimated proceeds of $645 million

Pretax gain in Q1/04 of $230 millionTax estimated at $43 million

Attractiveness of the Return24% on Bell Intrigna transaction8% on all Bell West funding

Proceeds due by August 3, 2004

Bell West Put OptionBell West Put OptionRationale

NoticeNotice











16

This slide intentionally left blank

This slide intentionally left blank

17

Financial OverviewFinancial Overview

EPSEPS $1.83 $1.83 4.6%4.6%

*Excludes impact from western operations and one-time charges*Excludes impact from western operations and one-time charges

2003 Performance

Baseline*Baseline*

EBITDAEBITDA $448.4 M$448.4 M2.1%2.1%

RevenuesRevenues $844.7 M$844.7 M1.1%1.1%

** 2003 excludes restructuring charges** 2003 excludes restructuring charges

Baseline Financial PerformanceBaseline Financial Performance

**

($ Millions)($ Millions) ($)($)

1997 1998 1999 2000 2001 2002 2003**0

100200300400500600700800900

0.00

0.50

1.00

1.50

2.00

2.50

Revenues EBITDA EPS

*2002 excludes restructuring charge*2002 excludes restructuring charge

18

$362

$459 $436$390 $390 $375

1998 1999 2000 2001 2002 2003

$362

$459 $436$390 $390 $375

1998 1999 2000 2001 2002 2003


Twelve months ended December 31

Baseline Operations Expense Per RGU*

*Revenue Generating Units (NAS, Wireless, Internet,TV)


Re-engineering InitiativesRe-engineering Initiatives

Contract RenegotiationsContract Renegotiations

Workforce Reductions Workforce Reductions

Bell Alliance SynergiesBell Alliance Synergies

Baseline Cost Reductions:Baseline Cost Reductions:

Continual Focus on Profitability

19

Debt RatioDebt Ratio

36.8 34.1 31.3 29.7 30.137.334.739.1*

1996

1997

1998

1999

2000

2001

2002

2003

36.8 34.1 31.3 29.7 30.137.334.739.1*

1996

1997

1998

1999

2000

2001

2002

2003

100%100%

*Proforma*Proforma

Debt PortfolioDebt Portfolio

* At December 31, 2003* At December 31, 2003

<5 Years<5 Years

5-7 Years5-7 Years

>7 Years>7 Years

Total LT Debt*Total LT Debt* $461.3 M$461.3 M

$379.4 M$379.4 M

$81.9 M$81.9 M

- 6.69%- 6.69%Weighted Average CostWeighted Average CostTerm To Maturity Schedule for LT DebtTerm To Maturity Schedule for LT Debt

- 3.16 years- 3.16 yearsAverage Term to Maturity Average Term to Maturity

$ 0.0 M$ 0.0 M

20

Balance Sheet StrengthBalance Sheet Strength

* EBITDA/Interest 9 months ended Sept 30, 2003.* EBITDA/Interest 9 months ended Sept 30, 2003.

** Standard & Poors long-term ratings as of Jan.27 2004** Standard & Poors long-term ratings as of Jan.27 2004

BCEBCE

AliantAliant

Manitoba TelecomManitoba Telecom AA

AA

AA

RogersRogers

TelusTelus BBBBBB

BB+BB+

EBITDA/Interest*EBITDA/Interest*

13.7

9.06.7

4.6

MTS Aliant BCE Telus


214 208264

210

2001 2002 2003 2004F

214 208264

210

2001 2002 2003 2004F

($ Millions)($ Millions)

Baseline CAPEX

21

Baseline Capital Intensity*Baseline Capital Intensity*

*Capex as a % of revenues **Source: RBC Capital Markets Sept. 2003*Capex as a % of revenues **Source: RBC Capital Markets Sept. 2003

24%24%

(Percent)(Percent)

0

10

20

30

40

50

60

1997 1998 1999 2000 2001 2002 2003 2004E 2005E

Long-Term Canadian Average 1990-2002**Long-Term Canadian Average 1990-2002**

NexGen MTS (ex-NexGen)

Baseline Free Cash Flow*Baseline Free Cash Flow*

$45-50 M$45-50 M

* After dividends and excluding changes in working capital* After dividends and excluding changes in working capital

$31 M$31 M $36 M$36 M

0

10

20

30

40

50

60

(Millions)(Millions)

2002 2003 2004E

22

Cash UtilizationCash Utilization

Share Buybacks

Share Buybacks

Dividend IncreasesDividend IncreasesAccretive Core Acquisition with Identifiable SynergiesAccretive Core Acquisition with Identifiable Synergies

Debt Reduction

Debt Reduction

Invest in “Core” Business for GrowthInvest in “Core” Business for Growth

Dividend Track RecordDividend Track Record

($/share)($/share)

47%*47%*

*Since inception*Since inception

Quarterly Dividend Annualized Quarterly Dividend Annualized

0.760.88

1.00

Q4 01 Q4 02 Q4 03

23

Share BuybacksShare Buybacks

7.4 Million Shares7.4 Million SharesRepurchasedRepurchased

Since 1999Since 1999

Cash UtilizationCash Utilization

Cash DeployedCash Deployed

Share Buybacks*Share Buybacks*

Dividends Paid**Dividends Paid**

$178 M$178 M

$353 M$353 M

$531 M$531 M* From 1999 to March 2003* From 1999 to March 2003** Dividends paid since 1997** Dividends paid since 1997

24

Baseline Financial OutlookBaseline Financial Outlook

EPSEPS

EBITDAEBITDA

RevenuesRevenues

2004F2004F

6-8%6-8%

3-5%3-5%

3-5%3-5%

Industry Leading ProfitabilityIndustry Leading Profitability

Proven Value Creation StrategiesProven Value Creation Strategies

Market Leader in ManitobaMarket Leader in Manitoba

SummarySummary

Return-Based investment PhilosophyReturn-Based investment Philosophy

Attractive Risk ProfileAttractive Risk Profile

25

Excellent Credit RatingsExcellent Credit Ratings

Growing Cash FlowsGrowing Cash Flows

Strong Balance SheetStrong Balance Sheet

SummarySummary

Consistent Cash Utilization PolicyConsistent Cash Utilization Policy

Documents

Notice - Bell MTS · This presentation contains certain forward-looking statements and there are ... Basic plus 6 channels & full high-speed Internet $69.95 per month ($10 savings)