ALASKA COMMUNICATIONS OVERVIEW
June 2013
1 | Alaska Communications
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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 1995. 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.”
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2 | Alaska Communications
ALASKA: A UNIQUE OPERATING ENVIRONMENT
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3 | Alaska Communications
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 5.85. The U.S.
average is 87.4.
Source: U.S. Census Bureau, www.census.gov
Source: U.S. Census Bureau, www.census.gov
Alaska is a state with a small population of 731,449 spread out over a vast
geographic region.
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UNIQUE LOCATION WITH A STRONG ECONOMY
STABLE ECONOMY
• The 2012 Gross State Product was roughly $53
billion.
• Alaska GDP per capita is $65,143, 3rd 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 5th 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, 2013
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5 | Alaska Communications
ABUNDANT NATURAL RESOURCES
OIL, GAS, AND MINING
• 4th 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)
Source: AEDC 2013 Resource Extraction Report: 10 year projection
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.
Combined Oil & Gas and Mining Construction / Exploration Project
Investments
Source: AEDC 2013 Resource Extraction Report: 10 year projection
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6 | Alaska Communications
OUR COMPANY AND OUR HISTORY
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A FEW MILESTONES IN OUR 120 YEAR HISTORY
1893
The Juneau and Douglas Telephone Company begins operations.
1921
Anchorage Telephone Utility begins operations.
1949
Telephone Utilities of the Northland begins operations.
1998
Alaska Communications Systems Group, Inc., (ACS), now Alaska Communications, is
formed.
1999
ACS completes an initial public offering of stock to become the state’s first statewide
telecommunications company.
2000
ACS acquires Internet Alaska Inc., the second largest Internet service provider in Alaska.
2008
ACS acquires the Northstar submarine cable, and builds AKORN, giving Alaska diverse
submarine routes to the LOWER 48.
2010
ACS becomes Alaska Communications.
2013
Alaska Communications launches the Alaska Wireless Network joint venture with GCI.
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8 | Alaska Communications
OUR PURPOSE AND CUSTOMER PROMISE
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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.
1994
1st Internet Service Provider in Alaska is founded
(acquired by Alaska Communications in 2000).
1996
1st in the state to launch Metro Ethernet.
2003
1st in the state to launch MPLS (Multi-Protocol
Label Switching).
2004
1st to launch 3G Network in Alaska.
2009
1st to offer geographically diverse connectivity to
the L48 – tripling the bandwidth leaving the state.
2010
1st to launch Android powered devices in Alaska.
2012
1st to launch 4G LTE in Anchorage, Fairbanks
and Juneau.
2012
1st to launch Virtual Private LAN Services (VPLS).
2013
1st 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
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10 | Alaska Communications
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.
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OUR CUSTOMERS
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12 | Alaska Communications
CLIENTS IN ALASKA AND BEYOND
PROUD TO SERVE ORGANIZATIONS DOING BUSINESS IN ALASKA AND BEYOND.
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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
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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
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15 | Alaska Communications
OUR SERVICES AND CAPABILITIES
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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.
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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 2013
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18 | Alaska Communications
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.
Take a tour of our Integrated
Network Management Center
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).
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.
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BUSINESS SOLUTIONS
A COMPREHENSIVE RANGE OF IT AND TELECOMMUNICATIONS
SOLUTIONS FOR BUSINESSES OPERATING IN ALASKA.
ALASKA COMMUNICATIONS BUSINESS SERVICES
IT SOLUTIONS
• ConstantlyOn IT
(Helpdesk support)
• OnSite IT (Break/Fix
support)
• Professional
Services
DATA
• Business Ethernet
• Metro Ethernet
• Enhanced Metro
Ethernet
• Enhanced
Ethernet Services
• MPLS
• VPLS
INTERNET
• Business Internet
• Internet Over
Ethernet
• Dedicated Internet
Access
• Mobile Broadband
• IT Equipment
• Private Line (e.g. T1)
• Hosted Colocation
• Data Backup
Click here for more information
on our IT solutions
Click here for more information
on our Data Services
WIRELESS
VOICE
• Wireless Phones,
Routers, and
Mobile Broadband
Devices
• VOIP
(Cisco and Polycom)
• Fleet Management
• Centrex
• Custom wireless
and telemetry
solutions
• Local and Long
Distance
• DSS / PRI / BRI
• PBX solutions
(Mitel and Avaya)
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
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20 | Alaska Communications
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
VOICE
• Mobile Voice
• Local
• Mobile Broadband
Data
• Long Distance
INTERNET
• Dedicated Home
Internet
• Mobile Broadband
• International
• Postpaid, Prepaid,
Lifeline
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
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21 | Alaska Communications
OUR BUSINESS PERFORMANCE
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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.
Growth in Alaska Retail Telecom
$1,500
Consumer
SMB
$1.1
Revenue ($ in millions)
$1,000
Enterprise
$1.4
CAGR
6%
$397
$857
$305
$460
9%
$460
$550
5%
2011
2015
$626
$321
$500
$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.
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PERFORMING TO OUR BUSINESS PLAN
•
•
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.
Retail Broadband Revenue Growth
year-over-year growth (%)
• 2012 was the first full year of performing to the
business plan outlined a year ago. Our results
speak to our ability to perform:
25%
FY 2012
20%
Q1 2013
15%
10%
5%
0%
Business
Consumer
Wireless
• We continued our performance into the first quarter of 2013, performing to our business plan with
consistency. Comparing Q1 2013 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 2012. 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.
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24 | Alaska Communications
THANK YOU
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25 | Alaska Communications