Needham Growth Conference January 2019 Safe Harbor Statement - PowerPoint PPT Presentation

Needham Growth Conference January 2019

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 Alaska Communications' business, please refer to the Alaska Communications’ SEC filings, including, but not limited to, our annual report on Form 10 -K, 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.” Non-GAAP Measures In an effort to provide investors with additional information regarding our financial results, in particular with regards to our liquidity and capital resources, we have disclosed certain non-GAAP financial information such as Adjusted EBITDA, Adjusted Free Cash Flow and Net Debt, which management utilizes to assess performance and believes provides useful information to investors. The definition of these non-GAAP measures are contained in our quarterly earnings press releases. Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP measures and should not be considered a substitute for Net Income, Net Cash Provided (Used) By Operating Activities and other measures of financial performance recorded in accordance with GAAP. Reconciliations of our non-GAAP measures to our nearest GAAP measures can be found in our earnings releases. Other companies may not calculate non-GAAP measures in the same manner as Alaska Communications. We do not provide guidance for Net Income and Net Cash Provided (Used) By Operating Activities. 2 2 | Alaska Communications

ALSK Investment Thesis Robust Broadband Growth Favorable Competitive Dynamics High Quality Fiber Assets Technology Innovation Strategic Customer Relationships 3 | Alaska Communications

Robust Broadband Growth Video Streaming Internet video traffic growth at ~24% CAGR 2016-2021 Gaming, Augmented / Virtual Reality Online gaming traffic growth at ~62% CAGR 2016-2021 Cloud Migration Business IP traffic growth at ~23% CAGR 2016-2021 5G Wireless Backhaul Small cell deployment increase ~35x in next 10 years Distributed Content Delivery Networks Traffic crossing CDN’s growth at ~38% CAGR 2016 -2021 Sources: Cisco Visual Networking Index: Forecast and Methodology, 2016 – 2021, and Management estimates 4 | Alaska Communications

~$1.6B Opportunity in Alaska Offers Significant Runway for Growth Total Market: ~$1.6B Telecom Market: ~$820M All others: ALSK: $167M ~$203M 20% 25% IT TELECOM 50% 50% GCI $450M GCI: $450M 55% • ALSK has grown share in the Enterprise / Carrier market segments with significant growth opportunity ahead • Growth expected from growing the expanding broadband market and further share gain from our competitors • The ~$836M IT market, represents significant opportunity to grow via gaining share of wallet 5 | Alaska Communications

Favorable Competitive Landscape Alaska Market Dynamics ▪ One primary wireline competitor ▪ Broadband and technology key to managing operating costs for businesses Differentiators ▪ Own and operate 2 of 4 submarine cables, with only diverse exit from Alaska ▪ MEF Certification, BGP Non Transit Peering and CDNs capabilities, FWA, Certified secure cloud connectivity ▪ Brand: recognized for local, trustworthy, reliable customer service Opportunities for Growth ▪ Grow with market ▪ Take share ▪ Expand share of wallet 6 | Alaska Communications

High Quality Fiber Assets ▪ Extensive and expanding fiber footprint covering major business areas in Alaska ▪ Own and operate 2 of the 4 subsea fiber cables connecting Alaska to Oregon and Washington with capacity on a third Recent investments in Fixed Wireless and Satellite capabilities extend network capabilities 7 | Alaska Communications

Network Serves as a Differentiator State of Art Secure IP Network High Quality Fiber & Broadband Network − Juniper IP/Advanced Ethernet core – − 100G wavelengths in state backbone with statewide 2.0 Certified Ethernet services diverse routes − All major military bases on fiber − Widely deployed Metaswitch voice − Extending fiber footprint into NW Alaska application soft-switch network − N+1 design, multiple wire centers with with our partner − 865 fiber lit buildings increasing annually distributed core network design − Over 75% of all buildings in our markets incorporates redundancy − Provisioning automation increases accuracy with 50+ employees are within 500 feet of an ALSK splice point and decreases delivery intervals − Metro fiber density increasing with 3 rd − Standards based networking built to party small cell fiber builds industry standards such as MEF 2.0 to − Own and operate two diverse submarine ensure the broadest possible compatibility routes to the Lower 48, with capacity on for our customers − Track record of network peering other systems for back-up/protection − Fiber assets from relationship carrier in the relationships and Content Delivery Network Arctic (North / NW Alaska) integration brings our customers closer to − 25.3K submarine fiber miles (6.6K route the content and provides a superior user experience miles) and 106.5K terrestrial fiber miles (11.6K route miles) 8 | Alaska Communications

Technology Leadership and Innovation Select Partnerships Next Generation Products Network Innovation ▪ First SIP product ▪ Fixed Wireless (FiWi) (sub 6Ghz) implementation in Alaska: Access ‒ QoS Enabled, Secure, MEF ‒ CAF II and surrounding areas Certified IP Network ‒ Major metro markets in Alaska ▪ Hosted Voice over Internet: ▪ P2P mmWave for Fixed Wireless ‒ HDVoice, Unified Backhaul Communications, OTT self ▪ Extending satellite solutions install ‒ Low Earth Orbit, C-Band, Ku- ▪ Secure Cloud Enablement Band ‒ Only Microsoft Express Route ▪ Converging networking and Certified Provider in Alaska ‒ Only CyrusOne cloud with SD WAN InternetExchange Certified ▪ Firsts in the market: Provider in Alaska ‒ Metro Ethernet & MPLS ▪ Internet Now for Multi- ‒ Carrier Ethernet 2.0 certified Dwelling Units (MDU’s) – Instant services turn up, unlimited data ‒ Voice over Internet and SIP next generation products ▪ IT Marketplace to serve small ‒ Microsoft Express Route business with IT Services 9 | Alaska Communications

Strategic Customer Relationships C ARRIER / F ED O IL & G AS S TATE / L OCAL H EALTHCARE / E DUCATION S TRATEGIC C OMMERCIAL Kodiak Area Native Assoc. 10 | Alaska Communications

Key Services ▪ Cyber security solutions 2012 Revenue Mix ▪ Professional services, help desk services IT Services ▪ Managed Solutions 17% 36% ▪ Only Alaska Microsoft ExpressRoute certification Data For Business ▪ 1 st in Alaska with Carrier Ethernet 2.0 Certification Networking 47% ▪ Up to 1Gbps speeds for retail customers Consumer Business/Wholesale Regulatory/Other Internet ▪ 10Gbps Wholesale/Service Providers Connectivity ▪ No data caps, no overage charges ▪ Secure hosted voice over internet solutions Business ▪ State of art SIP trunking services Voice 2017 Revenue Mix ▪ Up to 100Mbps speeds 22% 17% Unlimited For Home ▪ No data caps, no overage charges Internet 61% ▪ AK Voice provides simple, affordable and Home Voice modern VoIP solutions Consumer Business/Wholesale Regulatory/Other 11 | Alaska Communications

Focused Market Segments E NTERPRISE AND C ARRIER M ASS M ARKET Federal / Carrier Growth ▪ Fiber-fed WiFi and fixed wireless ▪ Wireless Backhaul ▪ Consumer Video Growth ▪ Key Growth Oil & Gas ▪ ▪ Growing MDU Market Share Drivers ▪ Education ▪ Operating Efficiencies ▪ Managed IT Technology ▪ Simple, one-price unlimited data package ▪ MEF Certified Products & Staff ▪ ▪ Seamless IT marketplace Competitive ▪ MSFT Azure ExpressRoute Differentiated Multi- Dwelling Unit (“MDU”) Go ▪ Advantage vs. ▪ FWA Access To Market strategy GCI Non-transit BGP Peering & CDN ▪ Deep Customer Relationships ▪ Data Networking & Internet Access ▪ Internet Access ▪ Key Products / Voice Communications ▪ Voice Communications ▪ Services Video (1H 2019) ▪ IT Services ▪ Carrier / Federal ▪ Retail Consumer Market ▪ Oil & Gas ▪ ▪ Commercial Market (SMB < ~100 employees) State / Local ▪ Customer Base ▪ Healthcare / Education ▪ Strategic Commercial (1) Excludes Regulatory revenue of $51mm. 12 | Alaska Communications