Iowa Telecommunications Services Inc
Iowa Telecommunications Services — Merger or Acquisition (December 2009)
29 slides from Iowa Telecommunications Services's merger presentation, Dec 1, 2009
Slide 1: Filed by Windstream Corporation Pursuant to Rule 425
Filed by Windstream Corporation Pursuant to Rule 425 under the Securities Act of 1933 and deemed filed pursuant to Rule 14a-12 under the Securities Exchange Act of 1934 Subject Company: Iowa Telecommunications Services, Inc. Commission File No. 001-32354 The attached presentation may be deemed to be
Slide 2: Windstream Communications
Windstream Communications Tony Thomas, Chief Financial Officer Mary Michaels, Director Investor Relations Bank of America Merrill Lynch Marketing Trip December 1, 2009
Slide 3: Safe Harbor Statement
“Safe Harbor” Statement Safe Harbor” Statement Windstream claims the protection of the safe-harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including statements regarding the completion of the acquisition and expect
Slide 4: Windstream is a communications and entertainment company serving rural America
Windstream is. . . . A COMMUNICATIONS AND ENTERTAINMENT COMPANY SERVING RURAL AMERICA Favorable Rural Markets Financial Overview (1) Geographically Diverse Serving 16 States - Revenue (2): $3.0B - OIBDA (3): $1.6B - Free Cash Flow (4): $787M - FCF / Share: $1.81 per share - Dividend: $1.00 per share
Slide 5: Windstream Business Model
Windstream Business Model Driving Shareholder Value Strategic Objectives Focus on free cash flow accretive activities Transform company to broadband and business model Operating Objectives Increase competitiveness and improve service levels Drive 3 core products (high-speed Internet, digital TV and
Slide 6: Windstream Strategic Objectives
Windstream Strategic Objectives Driving Shareholder Value Pursuing FCF Accretive Deals. . . . . .That are Good Strategic Fits Free cash flow accretive deals Valor (2006) Opportunity to generate meaningful CT Communications (2007) synergies D&E Communications (2009) Focusing on properties in attracti
Slide 7: Acquisition of Iowa Telecommunications
Acquisition of Iowa Telecommunications IOWA Telecommunications Overview Financial Overview (LTM Sept. 2009 (1)): Operating Overview (Sept. 2009): Revenue: $275M ILEC Lines: 214,100 Adjusted OIBDA $130M CLEC Lines: 41,500 Capex: $24M Broadband Subs: 94,500 Free Cash Flow (2): $69M Video Subs: 26,400
Slide 8: Acquisition of NuVox
Acquisition of NuVox NuVox Overview Financial Overview Business Overview Revenue $565M Footprint 16 States Pro forma OIBDA(2) $112M Customer Locations 88k Estimated Synergies $30M NuVox Highlights Leading - Regional CLEC with strong franchise, operating history and mgmt team Communications - Leading
Slide 9: Positioning Company as a Leading Rural Provider
Positioning Company as a Leading Rural Provider Acquisitions add complementary rural markets to Windstream’s footprint On a pro-forma basis, Windstream will operate in 23 states Note: Windstream and NuVoX shared markets: Little Rock, AR, Lexington, KY, Charlotte, Greensboro and Raliegh, NC
Slide 10: Integration Strategy Staged and Manageable
Integration Strategy Staged and Manageable The integration plans are staged in a manageable way, with D&E expected to be fully integrated in the next few months We expect to maintain NuVox’s billing platform and convert existing Windstream CLEC operations to that platform, making the integration pro
Slide 11: Combined Financial Overview
Combined Financial Overview Pursuing an Opportunistic Growth Strategy (Dollars in Millions) Total Expected Combined LTM 9/30/09 Windstream D&E Lexcom NuVox Iowa(3) Pre-Synergies (4) Synergies Company Revenue $ 2,963 $ 145 $ 43 $ 565 $ 275 $ 3,991 $ 3,991 (1) Adjusted OIBDA $ 1,591 $ 64 $ 23 $ 112 $
Slide 12: Transforming Company to Broadband and Business Model
Transforming Company to Broadband and Business Model Focusing on Growth Areas of the Business Pro Forma for all Pending Transactions, Over 50% of Windstream’s Revenue will be From Broadband and Business Customers
Slide 13: Monetizing the Broadband Connection
Monetizing the Broadband Connection Network positioned to drive incremental revenue Leveraging Existing Infrastructure Increasing Broadband ARPU with to Increase Sales Opportunities Faster Internet Speeds Upgraded our core network to increase Internet Speed Availability capacity, speed and reliabili
Slide 14: Positioning the Company to Capitalize on Business Opportunities
Positioning the Company to Capitalize on Business Opportunities The business channel represents just over one third of Windstream’s total revenue We have re-aligned the organization to shift resources to the business organization in order to improve focus, execution and customer service Additionally
Slide 15: Growth Opportunities for the Business and Enterprise Channel
Growth Opportunities for the Business and Enterprise Channel Increasing penetration of • Virtual Private Networks (VPN) and Virtual LAN services (VLS) enable customers to next generation data connect multiple branch offices and services remote locations Improved Internet offering • Dedicated Interne
Slide 16: Operating Objectives: Fragmented Competitive Environment
Operating Objectives Increasing Competitiveness with Sales and Marketing Initiatives Fragmented Competitive Improving Gross Adds with Environment Additional Distribution Cable Overlap (% of access lines) Channels Time Warner Marketing at the local level 29% Other 30% Door-to-door sales strategy Part
Slide 17: Improving Service Levels
Improving Service Levels Churn Reduction and Retention Strategies Network Retention and Save Team Reliability and Customer Trained to Help Customer Service Relationships Resolve Issues • Improve the service • Increase bundle penetration • Team dedicated to provisioning process • Proactively reaching
Slide 18: Marketing Activities Driving Industry Leading Operational Results
Marketing Activities Driving Industry Leading Operational Results HSI Penetration of Total Access Lines Video Penetration of Total Access Lines 39% 36% 34% 34% 32% 30% 29% 11% 11% 28% 27% 10% 9% 24% 8% 8% 8% 8% CNSL WIN IWA T CBB CTL FTR VZ Q ALSK WIN CTL IWA CNSL T FTR VZ Q Year-over-Year Change in
Slide 19: Financial Objectives: Delivering Solid Financial Results
Financial Objectives Delivering Solid Financial Results 3Q09 Revenue 3Q09 Expenses (1) 3Q09 OIBDA $772 $726 OIBDA of $391M, excluding Pension and restructuring $373 $31M in $366 $400 pension $360 and rest. 3Q09 3Q08 3Q09 3Q08 3Q09 3Q08 Revenue declined due Despite an incremental $23M Normalized for
Slide 20: Generating Strong and Sustainable Cash Flows
Generating Strong and Sustainable Cash Flows Net Cash from Ops Capital Expenditures Free Cash Flow $242 $86 $175 $223 $67 $137 3Q09 3Q08 3Q09 3Q08 3Q09 3Q08 Despite top line pressure, Capital expenditures Generating strong FCF, generated $242M in net were $67M, or ~9% of driven by cost structure cas
Slide 21: Solid Balance Sheet and Liquidity Position
Solid Balance Sheet and Liquidity Position Key Highlights Total cash of $290M at 9/30/09 and ~ $500M in revolver capacity Net leverage ratio of 3.2x Solid BB credit rating - Moody’s: Ba2; S&P: BB; Fitch: BB+ - Will likely maintain leverage around current levels should additional strategic opportunit
Slide 22: Windstream Highlights
Windstream Highlights Well-positioned to succeed going forward - Significant scale and profitability - Favorable rural markets - Sound capital structure - Strategic flexibility Delivering “best in class” operational results Delivering solid financial results Ranked 4th in 2009 Generating strong sust
Slide 23: Appendix
Appendix 1. Reconciliations of Non-GAAP Financial Measures 2. Supplemental Financial Information D&E Communications Lexcom NuVox Iowa Telecommunications
Slide 24: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Windstream Corporation Reconciliations of Non-GAAP Financial Measures Net Debt to OIBDA (net leverage ratio): As of (Dollars in millions) September 30, 2009 Long-term debt, including current maturities $ 5,223.1 Cash and cash equivalents (290.0) Net deb
Slide 25: Reconciliations of Non-GAAP Financial Measures
Reconciliations of Non-GAAP Financial Measures Free Cash Flow: Three Nine Nine Increase Months Ended Months Ended Months Ended (Decrease) (Millions, except per share amounts) September 30, 2009 September 30, 2009 September 30, 2008 Amount % Net cash provided from operations $ 242.2 $ 741.4 $ 729.8 A
Slide 26: D&E Communications – Supplemental Financial Information
D&E Communications – Supplemental Financial Information D&E COMMUNICATIONS UNAUDITED PRO FORMA CONSOLIDATED RESULTS (NON-GAAP) QUARTERLY SUPPLEMENTAL INFORMATION for the quarterly periods in the years 2009 and 2008 (Dollars in millions, units in thousands and per customer amounts in whole dollars) 2
Slide 27: Lexcom – Supplemental Financial Information
Lexcom – Supplemental Financial Information LEXCOM, INC. UNAUDITED PRO FORMA CONSOLIDATED RESULTS (NON-GAAP) QUARTERLY SUPPLEMENTAL INFORMATION for the quarterly periods in the years 2009 and 2008 (Dollars in millions, units in thousands and per customer amounts in whole dollars) 2009 2008 Total 3rd
Slide 28: NuVox – Supplemental Financial Information
NuVox – Supplemental Financial Information NUVOX, INC. UNAUDITED PRO FORMA CONSOLIDATED RESULTS (NON-GAAP) QUARTERLY SUPPLEMENTAL INFORMATION for the quarterly periods in the year 2009 and 2008 (Dollars in millions, units in thousands) 2009 2008 Total 3rd Qtr. 2nd Qtr. 1st Qtr. Total 4th Qtr. 3rd Qt
Slide 29: Iowa Telecommunications – Supplemental Financial Information
Iowa Telecommunications – Supplemental Financial Information IOWA TELECOMMUNICATIONS, INC. UNAUDITED CONSOLIDATED RESULTS QUARTERLY SUPPLEMENTAL INFORMATION for the quarterly periods in the years 2009 and 2008 2009 2008 (Dollars in millions and units in thousands) Total 3rd Qtr. 2nd Qtr. 1st Qtr. To
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