bank of america merrill lynch 2018 media communications
TRANSCRIPT
PowerPoint PresentationBank of America Merrill Lynch 2018 Media
Communications & Entertainment Conference September 2018
Safe Harbor This presentation may contain “forward-looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements. The following important factors, among other things, could cause or contribute to actual results being materially and adversely different from those described or implied by such forward-looking statements including, but not limited to: those discussed in this release; we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of market share; we may be unable to grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks could have a material impact on our market share and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back-office information technology systems could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital, and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our loans and credit facilities to provide for our short-term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the uncertain economic environment, including uncertainty in the U.S. and world securities markets, could impact our business and financial condition; our future cash flows could be adversely affected if it is unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation, which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety laws; the possibility that the expected synergies and value creation from our acquisition of Hawaiian Telcom will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian Telcom and other acquired companies will not be integrated successfully; the risk that unexpected costs will be incurred; and the other risks and uncertainties detailed in our filings with the SEC, including our Form 10-K report, Form 10-Q reports and Form 8-K reports.
These forward-looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from these forward-looking statements. We assume no obligation to update the information contained in this release except as required by applicable law.
2
Non-GAAP Financial Measures
This presentation contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income (loss) applicable to common shareholders excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non- GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com within the Investor Relations section.
1 Focus on investing where we are winning
• Strong demand for our fiber suite of products • Combined network business with over 14k fiber
route miles in Greater Cincinnati and Hawaii
• Strengthening North American platform • Growing UCaaS sales funnel – with more multi-
faceted wins nationwide
2 Why we win • The more fiber, the greater the market
penetration • IT services business, combined with our network
expertise, while being faster and more flexible than the competition
3 How we win • Continued investments in high speed, high
bandwidth fiber network creates future-proof asset that has a high barrier to entry
• Enhanced scale and expanded portfolio of complementary IT offerings to win larger, multi- faceted deals
4 Significant market opportunity
• Growth driven by IoT and 5G infrastructure spend • Growth driven by UCaaS, cloud, and security
Fiber continues to differentiate Cincinnati Bell from traditional carriers
Transform to become an international hybrid cloud solutions provider
Enhanced Strategic Focus and Flexibility
Building Two Distinct, Complementary Lines of Business With Expanded Geographic Reach,
Customer Diversification and Increased Runway for Growth
5 Multiple upside • Network peers trading at ~8-11x • IT peers trading at ~8-10x
6 Capital structure • Leverage target of approximately 4.0x achievable through efficient integration of Hawaiian Telcom and OnX – including realization of synergies
5
32.1%
Fioptics GrowthWireline Capex Last 3 Years as % of Revenue
• Expanded our fiber network to reach more than 70% of the homes and businesses in Greater Cincinnati (> 50% FTTP) • We are winning against national competitors where we have fiber, with 40% Fioptics internet penetration • Opportunity to replicate our fiber success in Hawaii, which has fiber to approximately 65% of the addresses on Oahu
We Are Investing Where We Are Winning… Entertainment & Communications
1 32 3
Source: Company filings and Capital IQ (as of Dec 31, 2017) [1] Excludes Level 3 and adjusted for data centers [2] Pro forma for FairPoint [3] Historicals reflect actuals and are not adjusted to pro forma Verizon CTF, ELNK or Broadview [4] CBB reflects 50 Mbps or more; CTL reflects 40 Mbps or more as of Q2 2016 [5] Not pro forma for Level 3 or EarthLink [6] Expects 20% of homes with GPON / 1 Gbps by 2019
Fiber Availability
$254 $310 $327
Fioptics Revenue
($ in mm) LTM Y/Y Q2 2018 Y/Y
Revenue $327 +15% $85 +11% % of E&C Revenue 47% 49%
Internet Subs (000s) 235.3 +10% % Penetration 40%
Video Subs (000s) 145.1 +2% % Penetration 25%
6
Uses
Cash & Equivalents
Revenue
$1,289
Cash to Shareholders
214
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18
Less: Cash Used
(387)
Li, Jessica: Li, Jessica: 18.45 cash consideration Includes Cash for RSUs
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Less: OnX Contribution3
Cash for RSUs
Pro Forma Cash & Equivalents
614
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
Fees & Other
Cash to B/S
CBB Cash
AR Facility
29
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
Total
529
42.394
Plus: HCOM
Shares Issued to HCOM
Caylor, David: Caylor, David: 10k, at 12/31/17
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18
Plus: Run Rate Synergies5
Li, Jessica: Li, Jessica: Introducing the new CBB IP Appendix
Options Dilution
ERROR:#NAME?
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14
Li, Jessica: Li, Jessica: HCOM 2017 10k, pg 53 OnX: Introducing the new CBB IP Appendix CBB 2017 Q4 IP pg 13
Pro Forma Adj. EBITDA excl. SBC
$460
ERROR:#NAME?
1. Assumes as if the transaction were completed based on year end balance sheets at 12/31/17 and latest share count numbers from public filings; cash used and AR draw include $25mm of fees
2. Includes $155mm of preferred stock liquidation amount
3.Since close of OnX transaction on Oct. 2, 2017
4. Based on fiscal year end April 30, 2017 audited financials for OnX
5. Includes $11mm and $10mm for HCOM and OnX respectively
6. Includes $3mm and $5mm for HCOM and OnX respectively
Options Table
Caylor, David: Caylor, David: 10k
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
HCOM Shares
7.558
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18, x exchange ratio
Li, Jessica: Li, Jessica: 2017 Q4 PR including SBC
Li, Jessica: Li, Jessica: Introducing the new CBB IP Appendix
Li, Jessica: Li, Jessica: HCOM 2017 10k, pg 53 OnX: Introducing the new CBB IP Appendix CBB 2017 Q4 IP pg 13
Diluted Shares Oustanding
$519
Sheridan, Philip: Sheridan, Philip: All 2010 data from Form 8-K 2/9/12 Note: 8-K 2/15/11 had listed Adjusted EBITA at 501.6
$545
Sheridan, Philip: Sheridan, Philip: All 2011 data from Form 8-K 2/27/13
$535
Sheridan, Philip: Sheridan, Philip: All 2012 data from Form 8-K 2/20/14
$416
Sheridan, Philip: Sheridan, Philip: All 2013 data from Form 8-K 2/19/15
$330
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16
$302
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
$305
$446
330
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16 Note Form 8-K 2/19/15 stated: Adjusted EBITDA: 379.2 Wireless EBITDA: 44.4 Ex Wireless: 334.8
302
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
305
446
Sheridan, Philip: Sheridan, Philip: Taken from 10ks
Sheridan, Philip: Sheridan, Philip: All 2013 data from Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
Sheridan, Philip: Sheridan, Philip: Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: Form 8-K 2/15/18
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16 Note Form 8-K 2/19/15 stated: Adjusted EBITDA: 379.2 Wireless EBITDA: 44.4 Ex Wireless: 334.8
3
4
5
5
3
4
5
14
$432
$461
$455
$357
$333
$306
$310
$460
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
$81
$77
$24
$5
$58
$7
Sheridan, Philip: Sheridan, Philip: Note Cash was 7.6 in Form 8-K 2/18/16
$10
$10
2,524
2,534
2,689
2,265
1,701
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,784.2 in Form 8-K 2/19/15
1,238
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,245.6 in Form 8-K 2/18/16
1,207
1,900
Li, Jessica: Li, Jessica: From old CBB IP
Sheridan, Philip: Sheridan, Philip: Note Cash was 7.6 in Form 8-K 2/18/16
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,784.2 in Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,245.6 in Form 8-K 2/18/16
4.5x
5.0x
5.4x
5.0x
4.1x
3.9x
Difference
0.8x
0.8x
0.9x
0.9x
-0.0x
-0.1x
-0.1x
5.7x
5.3x
5.9x
6.3x
4.9x
4.0x
3.9x
4.1x
5.9x
5.6x
6.0x
6.4x
5.2x
4.1x
4.0x
Note: CBB began reporting Adjusted EBITDA excluding wireless in the February 2015 8-K
2018E Midpoint
CIQ_LinkingNames
CIQANR_057fb8fa751340ae96ef8be95bc585e7
2017 Rev
% 2017 Change
4142
380
2409
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
2017 Q4 Rev
Li, Jessica: Li, Jessica: PF for EarthLink
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
3966
356
2217
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
% 2017 Q4 Change
Capex
$211
86
125
2018
$200
100
100
Total
$2,133
$1,229
$904
CNSL
WIN
FTR
FY2015
$284
$2,872
$250
FY2016
286
2,900
242
900
1,401
FY2017
211
2,872
227
839
1,188
Total Capex
$17,900
$1,635
FY2016
769
16,876
1,568
6,369
10,255
FY2017
790
16,103
1,461
6,002
9,128
Total Revenue
Li, Jessica: Li, Jessica: 2017 10k pg F-6
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 14
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 14
Li, Jessica: Li, Jessica: (ex Level 3)
Li, Jessica: Li, Jessica: Including Fairpoint
Li, Jessica: Li, Jessica: PF for EarthLink
17.0%
15.4%
11.3%
2010 2011 2012 2013 2014 2015 2016 2017 2018 115 200 312 117 89 104 106 86 100
2010 2011 2012 2013 2014 2015 2016 2017 2018 35 56 55 80 93 180 180 125 100
150 256 367 197 182 284 286 211 200
0.32100000000000001 0.16989327620432793 0.15430603028652545 0 0.11303208906352324
2015
2016
2017
$1,460.6
$4,663.5
$379.8
356.36
% YOY Change
$719.6
2015
2016
2017
Revenue
17,900.0
17,470.0
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
16,297.0
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
4,289.0
3,964.0
David Caylor: David Caylor: Assumed equal
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
David Caylor: David Caylor: 8k dated 9/19/17
Li, Jessica: Li, Jessica: 2017 Q4 ER
(594.0)
(194.0)
(147.0)
2.0
(4.6%)
(4.2%)
Capex
CTL
$2,872.0
$2,958.0
$2,886.0
Li, Jessica: Li, Jessica: PF for capex excluding integration of Qwest & Level 3
Data centers
David Caylor: David Caylor: Assumed equal
Li, Jessica: Li, Jessica: PF for capex excluding integration of Qwest & Level 3
Li, Jessica: Li, Jessica: 2017 Q4 ER
Li, Jessica: Li, Jessica: 2017 Q4 ER
(58.0)
(14.0)
2013
2014
2015
2016
2017
$359
$442
$537
$637
$705
Legacy Revenue
Strategic Revenue
2012 2013 2014 2015 2016 2017 305.60000000000002 358.6 441.7 536.6 637 705 Legacy Revenue 2012 2013 2014 2015 2016 2017 494.7 447.8 414.3 366.9 312.7 271.5 Integration
2012 2013 2014 2015 2016 2017 219.2 236.1 305.5 264.3 235.6 312 Total
2012 20 13 2014 2015 2016 2017 1019.5 1042.5 1161.5 1167.8 1185.3 1288.5
IT Services
Top Provider
4.4%
2
Accenture
4.0%
3
Deloitte
3.0%
4
HPE
2.6%
5
Li, Jessica: Li, Jessica: From IPs Not includisve of eliminations
316
344
433
435
431
362
CBTS Revenue
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 362 OnX Revenue
2012 2013 2014 2015 2016 2017 150 Total
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 512
CBTS 2017 PF Revenue Mix2
Cloud Services Professional Services Management & Monitoring Unified Communications Telecom & IT Hardware 53.5 114.6 21.1 42.3 280.3
_CIQHiddenCacheSheet
2
2016
2017
2018
2019
2020
2021
Li, Jessica: Li, Jessica: 2017 Cisco VNI Forecast pg 6
65,942
83,371
102,960
127,008
155,121
187,386
33,647
42,267
51,722
62,330
73,741
85,047
Fixed internet 2017 2018 2019 2020 2021 83371 102960 127008 155121 187386 Managed IP 2017 2018 2019 2020 2021 27140 31304 35226 39908 42452 Mobile data 2017 2018 2019 2020 2021 11183 16646 24220 34382 48270 Total
228,411
5G
2016
24,917
25
2017
73,704
74
2018
124,592
125
2019
186,076
186
2020
259,853
260
2021
350,227
350
2022
454,786
455
CAGR
62%
Towers
Small Cells / Tower 2016 2017 2018 2019 2020 2021 2022 0.16283918021644794 0.47690655209452204 0.78651600277760247 1.1404371115823537 1.5432258600927646 2.0095996603108843 2.5335561683518564
Revenue Mix
Li, Jessica: Li, Jessica: CBB 2017 Q4 IP pg 23
FY2017
13%
Li, Jessica: Li, Jessica: CBB 2017 Q4 IP pg 23
32%
22
10%
Li, Jessica: Li, Jessica: Presidio Oct 2017 IP pg 8 Gartner Info security backup
Tech Consulting & Implementation
3%
Services
IT Services & Hardware
Sheridan, Philip: Sheridan, Philip: All Data in this table taken from 8-Ks
$316
$344
$433
$435
$431
$512
$233
$143
$168
Li, Jessica: Li, Jessica: Per CBB Management
Sheridan, Philip: Sheridan, Philip: All Data in this table taken from 8-Ks
Li, Jessica: Li, Jessica: Per CBB Management
Li, Jessica: Li, Jessica: Per CBB Management
$205
$225
$232
$78
43%
42%
39%
47%
52%
45%
33%
Total Services Revenue1
2012 2013 2014 2015 2016 2017 135 143 168 205.2 225 231.5
2012 2017 0.42762115932847644 0.45232512700273542
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 361.8 OnX
2012 2013 2014 2015 2016 2017 0 0 0 0 0 150
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 511.8
Slide 6
Li, Jessica: Li, Jessica: 2011 Q4 10k IP pg 6
47
$68
$142
$191
$254
$310
$327
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
1059
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
1162
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
ERROR:#NAME?
ERROR:#NAME?
ERROR:#NAME?
198
Li, Jessica: Li, Jessica:
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: 2014 annual report pg 1
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 8
235
145.1
+2%
% Penetration
25%
Fioptics Revenue 2010 2011 2012 2013 2014 2015 2016 2017 LTM 27.976190476190478 47 68.2 100.8 142 191 254 310 327.30137301000002
Internet Subscribers
2010 2011 2012 2013 2014 2015 2016 2017 27 39 57 80 114 154 198 235.3 Video Subscribers
2010 2011 2012 2013 2014 2015 2016 2017 28 40 55 74 91 114 138 145.1
2010 2011 2012 2013 2014 2015 2016 2017 55 79 112 154 205 268 336 380.4
Slide 10
Slide 11
Customer Name
Franciscan Alliance
$48K MRR or $2.91M
$14K MRR or $840K
06/18
06/18
05/18
08/18
08/18
18-Nov
09/18
Hosted UC
Description
4 site Proof of concept prior to implementing the remaining location. Offering quality of experience for phone & enhancement of video conferencing & important business applications
Newest UC platform, cloud networking, & enhancement to business applications
# of Profiles
# of Contact Center Profiles
Takeitha Lawson: Employee Profile Type call center vs. staff employee (needs separate profile)
100
50
First site scheduled to be installed this month
Minimum is 400
Slide 11a
Li, Jessica: Li, Jessica: From IPs Not includisve of eliminations
317
331
386
CBTS 2017 PF Revenue Mix2
Cloud Services Professional Services Management & Monitoring Unified Communications Telecom & IT Hardware 53.5 114.6 21.1 42.3 280.3
Slide 13
2017 LTM 330.83883954999897 386.30625633999898
22.2%
22.2%
17.8%
22.2%
22.2%
10.4%
60.9
8.0
Average Age Average Tenure % Women (2 most common headcount) % Minority (1 most common headcount) Board Independence 0.60888888888888881 0.24 0.22222222222222221 0.22222222222222221 0.77777777777777779
Growth in Network Capacity and Speed Demands 5G and Small Cell Opportunity
• Market opportunity for 5G acceleration
– Verizon plans to deploy 8k to 10k small cells in Boston, investing $300 million over six years
– AT&T plans to launch mobile 5G in 12 U.S. markets this year
• UBS research estimates 500x increase in small cell sites to support 5G densification in NYC, based on mmWave spectrum and 100 meter propagation distance
25 74
125 186
260 350
Small Cells (000s)
Source: Nokia, Wall Street research and news articles [1] Cisco VNI Forecast as of 6/6/17 [2] G. Fast is “Fast access to subscriber terminals” and is a standard to offer fiber-like speeds over copper wires [3] VDSL stands for “very high bit rate digital subscriber line” and is digital subscriber line technology that provides data transmission faster than asymmetric data subscriber lines [4] SNL Small Cell and Tower Projections as of 8/30/17
Entertainment & Communications
Cincinnati Bell is Well-Positioned to Capitalize on IoT and wireless 5G Opportunities
…Which Creates Competitive Advantages And Future Growth Opportunities
2 3
Speed Capability (Mbps) 4
Not a matter of “IF” high bandwidth is necessary but a matter of when not having it makes you irrelevant
121,694 150,910
186,454 228,411
278,108
2017 2018 2019 2020 2021 Fixed internet Managed IP Mobile data
300~200 - 300
5G WirelessCable (DOCSIS 3.1)
• Adds operational scale and expands our metro-fiber fiber footprint and commercial opportunity in Hawaii • Opportunity to continue fiber investment in Hawaii – currently 65% coverage in Oahu, with opportunity to continue
Oahu build and invest in other islands where ROI makes sense • 2.6TB of Trans-Pacific fiber cable capacity connecting Asia and U.S.
• Hawaii’s fiber-centric technology leader providing voice, video, broadband, data center and cloud solutions • Incumbent position with strong brand equity
• Closed on July 2, 2018
• ~$11M annually (to be realized within two years post-close, excluding potential revenue synergies from cross-selling opportunities)
Hawaiian Telcom 2Q18 ResultsHawaiian Telcom Network Map
Completion of the Hawaiian Telcom Merger
Business Description
Expected Cost Synergies
Combination with Hawaiian Telcom Represents Opportunity to Scale CBB’s Fiber Success in Another Attractive Market
• Fiber is available to more than 65% of the available 325,000 homes and businesses on the island of Oahu
($ in millions) 2Q18 Y/Y Q/Q
Revenue $89 - 2% Flat
Consumer $34 -1% Flat
Business $40 -4% +2%
Wholesale $13 Flat -9%
Other $2 -12% +10%
8
9
Acquisition of OnX, Creating a Leading North American IT Services Provider…
Growth Opportunity
Business Description
Expected Cost Synergies*
• Expansion of geographic footprint and addressable market beyond Cincinnati to accelerate momentum in IT services
• Attractive enterprise customer base adding diversification and cross-selling opportunities
• Closed on October 2, 2017 • 2Q18 YTD Contribution: − $90M in revenue
• OnX provides industry-leading technology services and solutions to enterprise customers in the U.S., Canada and the U.K.
• ~$10M annually *To be realized within two years post-close, and excluding potential revenue synergies from cross-selling opportunities
Offices
Key Technology Partners / Certifications
Combined IT Services business with a diversified customer base and increased geographic footprint
IT Services & Hardware
Growing Markets
…which Positions Cincinnati Bell to Tap Into a Fragmented and Growing IT Services Market…
Scaling to Create Strategic Flexibility
Q2 ’18 YTD Service Revenue Mix
[1] Based on Gartner research; Market defined as 2016A North America IT Services market [2] Based on Gartner research [3] Market size in billions, figures represent North America estimates [4] Includes cloud-based conferencing, telephony and messaging
Other Service Providers 71%
Market2 2017 Market Size3
Cloud-Based Unified Communications4 $109 13% IaaS (Cloud) 18 32% Enterprise Security Services 22 10% Tech Consulting & Implementation 120 3%
10
• Launched nationwide SD-WAN and NaaS products
• Reorganized segment adding CLEC commercial operations to highlight strength of growing UCaaS business
• Continued demand for Communications services– recent 2Q18 YTD wins:
• UCaaS contract hosts 32,000 profiles across 96 locations (1Q18)
• SD-WAN project delivers service to approximately 50 sites (2Q18)
• SD-WAN, NaaS and UCaaS deal hosts approximately 300 profiles at 30 sites
1
1
[1] Includes OnX as of October 3, 2017 [2] Pro Forma revenue includes OnX revenue for the twelve months ended December 31, 2017 as disclosed in Cincinnati Bell’s 2017 Form 10-K
Creating Hybrid IT Solutions Provider Well Positioned to Capitalize on Significant Market Opportunities Presented by UCaaS, Cloud, Security, and Infrastructure Needs
IT Services & Hardware
Diversifying Customer Mix
33%
<10%
12
1,500+ Employees
2,400+ Customers
Note: Figures shown as of 12/31/17
IT Services & Hardware
Strategic Revenue Growth
Disciplined Capital Allocation Strategy
• Investments in fiber and IT solutions create platforms for long-term value
• Monetized CyrusOne and wireless assets – improved leverage profile from ~6x in 2013 to ~4x in 2017
• Ability to fund fiber investments through cash flow
($ in millions)
• Completed internal reorganization leading to two distinct business units, with the appropriate scale, structure and leadership committed to driving their respective brands forward
• Reporting changes beginning 1Q’18 to improve investors’ ability to appropriately value these services independently
– Entertainment and Communications segment is reported in the following three categories: Fioptics, Enterprise Fiber and Legacy
– IT Services and Hardware segment is reported in the following practices: Communications, Cloud, Consulting and Infrastructure Solutions (previously referred to as Telecom and IT Hardware sales)
% of Total Revenue
310 327
86 83
$331 $386
2017 LTM Fioptics Revenue Enterprise Fiber Revenue IT Services Revenue
$727 $796
Fioptics Revenue of
$168M +12% y/y
Total Revenue ($ in millions)
Adjusted EBITDA ($ in millions)
IT Services & Hardware Intersegment
IT Services & Hardware Corporate
Continued Strong Demand for Fiber
CBB continues to win with fiber in a very competitive environment
• Fioptics which includes a combination of FTTP and FTTN addresses, is available to 589,200 homes and businesses, or approximately 72% of Greater Cincinnati
• Cincinnati Bell offers FTTP to 55% of Cincinnati's total addressable market
Total Fioptics Subscribers (in thousands)
1. FTTP: fiber-to-the-premise 2. FTTN: fiber-to-the-node
25%
40%
18%
$91
$51
$30
Consumer Market Business Market
• Deployed fiber to the premise technology to 6,300 additional small business addresses across the islands year-to-date
• BVoIP and Ethernet growth generated 2% sequential revenue growth
Carrier Market
• Awarded major multi-year small cell contract with a large national wireless carrier to build 250 sites in the next 12-18 months
• 2Q18 sequential revenue decline primarily driven by pricing pressure from national wireless carrier
Capital Expenditures
addresses in Hawaii during 2H18
• $40M - $45M
• $175M - $185M
• 2Q18 sequential revenue growth from high-bandwidth fiber Internet and video offset declines in legacy voice and DSL
BVoIP (y/y) (q/q) Revenue 20% 5% Subscribers 13% 1% ARPU 5% 3%
Internet (y/y) (q/q) Revenue 14% 6% Subscribers 4% 1% ARPU 10% 5%
Video (y/y) (q/q) Revenue 4% 0% Subscribers 10% 4% ARPU -4% -2%
17
($ in millions) 2Q18 YTD Y/Y
Consulting $78 n/m
Cloud 46 14%
Communications 82 7%
Trusted provider of Voice services for more than 100 years
Momentum in Communications
IT Services & Hardware
Free Cash Flow & Capital Structure
1. Calculated as net debt divided by original 2018 Adjusted EBITDA Guidance (mid-point) as provided on February 15, 2018 2. Calculated as 2Q18 net debt actuals plus cash payments for Hawaiian Telcom merger divided by the sum of the original 2018 Adjusted EBITDA
(mid-point) provided on February 15, 2018 plus Hawaiian Telcom year-to-date June 30, 2018 results plus the mid-point of expected contribution from Hawaiian Telcom for 2H18
3. Excludes capital leases of $78 million as of period ending June 30, 2018
($ in millions)
Net Debt
Capital Structure3
2Q18 Actuals 2Q18 Proforma
2Q18 Y/Y YTD Change
Adjusted EBITDA (Non-GAAP) $159 $8 Interest Payments (64) (37) Pension and OPEB Payments (6) (1) Restructuring & Severance related payments (8) 9 Transaction and Integration Costs (4) (4) Income Tax Refunds 14 (3) Working Capital and Other (1) (5) Cash Provided by Operating Activities (GAAP) $90 ($33) Capital expenditures (71) 34 Restructuring & severance related payments 8 (9) Preferred stock dividends (5) - Transaction and Integration Costs 4 4 ( ) Free Cash Flow (Non-GAAP) $26 ($4)
• Merger with Hawaiian Telcom Cash payments totaled $560M including the repayment
of Hawaiian Telcom debt and merger related fees and expenses
Issued 7.7M new Cincinnati Bell common shares for Hawaiian Telcom merger consideration
$22
$625
• Flexible capital structure with strong liquidity
• No material maturities until 2024
19
Chart3
Bonds
$479
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 22.3 625 350 87.9 Term Loan B
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 600 AR Facility
$154
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 35
Financial Summary
FINANCIAL SUMMARY
($ in millions)
*Fiber to the Premise (FTTP), Fiber to the Node (FTTN)
IT SERVICES AND HARDWARE METRICS
QTD
310.4
310.9
308.7
307.9
235.3
232.8
226.6
221.2
$ 52
$ 51
$ 52
$ 53
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
$ 52
0.6
(0.3)
1.1%
-0.5%
$ 46
$ 47
$ 45
$ 45
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
$ 45
(0.9)
1.1
-2.0%
2.5%
2.1%
1.6%
1.7%
2.0%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
1.8%
0%
0%
25.8%
12.0%
1.2%
1.1%
1.1%
1.2%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
1.3%
0%
-0%
5.3%
-5.6%
3.0%
3.0%
3.3%
4.4%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
4.3%
0%
-1%
1.3%
-29.5%
678
672
665
659
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
654
6.4
24.7
1.0%
3.8%
83%
82%
82%
81%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
80%
1%
3%
1.1%
3.9%
-9%
-9%
-9%
-8%
Christopher Glynn: Christopher Glynn: From CBT_AccessLines_5Qtr_CBT report in HFM (ER = Segment Metric Info).
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Takeitha Lawson: ER
Takeitha Lawson: ER
(41,565)
(43,600)
(22,600)
(25,100)
(26,800)
2,035
(14,765)
-4.7%
55.1%
-15%
-15%
-19%
-20%
-20%
0%
5%
-0.3%
-26.4%
5,403
7,300
5,000
7,800
9,600
(1,897)
(4,197)
-26.0%
-43.7%
5%
7%
6%
10%
12%
-2%
-7%
-27.9%
-55.9%
Business
-10%
-10%
3%
2%
2%
-0%
-12%
2.3%
-601.1%
(22,567)
(22,900)
(23,600)
(25,600)
(25,900)
333.00
3,333
-1.5%
-12.9%
-13%
-12%
-12%
-13%
-13%
-0%
0%
2.2%
-2.1%
14%
19%
26%
25%
30%
-5%
-16%
-26.7%
-54.7%
Total
-9%
-3%
-1%
-2%
-2%
-7%
-7%
257.5%
370.4%
348.238
384.4
145
122
493
507
-13
-0.0265686516
Year
FTTP
FTTN
FTTP
FTTN
Year
FTTP
FTTN
FTTP
FTTN
1
33%
22%
22%
17%
1
32%
15%
24%
11%
2
38%
32%
24%
15%
2
34%
29%
23%
18%
3
38%
24%
26%
18%
3
38%
30%
24%
22%
4
47%
26%
28%
22%
4
47%
26%
30%
23%
* Low FHSI penetration for FTTN 48+ months due to low MDU penetration for areas released 48+ months ago
Capital
1,165
1,150
Takeitha Lawson: Plan has $876 but Mike believes it will be higher ~ $900 due to some risks.
1,335
879
1,065
1,128
(500)
(224)
(170)
1,258
1,065
1,016
32
59
$ 5.0
$ - 0
2.6
77.8
80.0
$ 265.8
$ 302.2
80.4
80.7
$ (6.4)
$ (5.4)
(2.60)
(0.70)
Entertainment & Communications 2Q17 2Q18 176 173.9 One Time Fiber Build Project 2Q17 2Q18 5 0 IT Services & Hardware 2Q17 2Q18 84.8 128.30000000000001 Intersegment 2Q17 2Q18 -6.4000000000000341 -5.4000000000000341
Entertainment & Communications 2Q17 2Q18 70.300000000000011 66.400000000000006 One Time Fiber Build Project 2Q17 2Q18 2.6 IT Services & Hardware 2Q17 2Q18 7.5 14.3 Corporate 2Q17 2Q18 -2.6 -0.70000000000000284
$85
$174
$181
-$5.4
-$6.4
$297
$260
$72
$8
$14
$66
$80
-$1
-$2
-$72
$128
FTTP
Non-FTTP
Fioptics
49%
$1
3%
-17%
Legacy
$68
$79
($11)
-14%
-14%
Total
$174
$176
($2)
-1%
-4%
Slide 9
$214
$143
$102
$108
$145
$235
$235
415
141
140
449
557
589
Cloud
18%
Communications
33%
Consulting
31%
Consulting
40
31%
Cloud 18%
Communications 33%
Consulting 31%
Slide 12- FCF Schedule
Cash Interest Payments Rollforward - June 2018
Takeitha Lawson: Takeitha Lawson: <K:\acctg\SEC Filings\2018 SEC Fillings\Q2\Cash> Interest Payments; "Cash Interest Payments Rollforward - June 2018.xlsx"
Pension and OPEB Payments
Working Capital and Other
$90
($33)
$123
Takeitha Lawson: Takeitha Lawson: Referenced as rounding in Q217 presentation
Fx/Plug
Takeitha Lawson: Takeitha Lawson: Stock Based Comp on Q217 presentation
Takeitha Lawson: Takeitha Lawson: <K:\acctg\SEC Filings\2018 SEC Fillings\Q2\Cash> Interest Payments; "Cash Interest Payments Rollforward - June 2018.xlsx"
-33
0
$26
($6)
$30
29
(0.10)
1.90
- 0
-4
6/30/18
600.0
22.3
625.0
350.0
77.9
1,346.00
1,929.00
* Leverage increased due to not having HCOM & only 1 quarter of OnX EBITDA on the books
CBB Standalone
Slide 12- Debt Maturity
600
Bonds
22.3
625
350
87.9
Bonds
$479
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 22.3 625 350 87.9 Term Loan B
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 600 AR Facility
$154
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 35
Revised Guidance
Capital Expenditures
Actuals/Revised Target $71 $230 – $255
• Invested $38 million in Fioptics year-to-date, passing an additional 17,000 new addresses
• Expect to pass 40,000 new addresses during 2018, up from original 35,000 target
• Hawaiian Telcom plans to pass an additional 1,000 addresses on Oahu and 1,000 addresses on neighbor islands during 2H18
YTD 2Q18 FY 2018 Guidance
Construction $15 $35 – $45
Installation 18 45 – 50
Enterprise Fiber 8 20
($ in millions)
Actuals/Original Target $71 $190 – $210
Total Hawaiian Telcom – $40 – $45
20
2018 Outlook
• Updated previous 2018 financial guidance to include the merger with Hawaiian Telcom, which closed on July 2, 2018
• Revenue guidance reflects adoption of new revenue recognition standard Infrastructure Solutions sales recognized
net of product cost
Capital Expenditures $230M – $255M
Interest payments $120M – $130M
Impact of New Revenue Standard
($ in millions) Revenue
Revenue Guidance “Pre ASC 606” $1,880 – $1,965
Revenue Adjusted EBITDA
21
Slide Number 5
Slide Number 6
Slide Number 7
Slide Number 8
Slide Number 9
Slide Number 10
Slide Number 11
Slide Number 12
Slide Number 13
Safe Harbor This presentation may contain “forward-looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements. The following important factors, among other things, could cause or contribute to actual results being materially and adversely different from those described or implied by such forward-looking statements including, but not limited to: those discussed in this release; we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of market share; we may be unable to grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks could have a material impact on our market share and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back-office information technology systems could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital, and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our loans and credit facilities to provide for our short-term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the uncertain economic environment, including uncertainty in the U.S. and world securities markets, could impact our business and financial condition; our future cash flows could be adversely affected if it is unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation, which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety laws; the possibility that the expected synergies and value creation from our acquisition of Hawaiian Telcom will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian Telcom and other acquired companies will not be integrated successfully; the risk that unexpected costs will be incurred; and the other risks and uncertainties detailed in our filings with the SEC, including our Form 10-K report, Form 10-Q reports and Form 8-K reports.
These forward-looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from these forward-looking statements. We assume no obligation to update the information contained in this release except as required by applicable law.
2
Non-GAAP Financial Measures
This presentation contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income (loss) applicable to common shareholders excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non- GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com within the Investor Relations section.
1 Focus on investing where we are winning
• Strong demand for our fiber suite of products • Combined network business with over 14k fiber
route miles in Greater Cincinnati and Hawaii
• Strengthening North American platform • Growing UCaaS sales funnel – with more multi-
faceted wins nationwide
2 Why we win • The more fiber, the greater the market
penetration • IT services business, combined with our network
expertise, while being faster and more flexible than the competition
3 How we win • Continued investments in high speed, high
bandwidth fiber network creates future-proof asset that has a high barrier to entry
• Enhanced scale and expanded portfolio of complementary IT offerings to win larger, multi- faceted deals
4 Significant market opportunity
• Growth driven by IoT and 5G infrastructure spend • Growth driven by UCaaS, cloud, and security
Fiber continues to differentiate Cincinnati Bell from traditional carriers
Transform to become an international hybrid cloud solutions provider
Enhanced Strategic Focus and Flexibility
Building Two Distinct, Complementary Lines of Business With Expanded Geographic Reach,
Customer Diversification and Increased Runway for Growth
5 Multiple upside • Network peers trading at ~8-11x • IT peers trading at ~8-10x
6 Capital structure • Leverage target of approximately 4.0x achievable through efficient integration of Hawaiian Telcom and OnX – including realization of synergies
5
32.1%
Fioptics GrowthWireline Capex Last 3 Years as % of Revenue
• Expanded our fiber network to reach more than 70% of the homes and businesses in Greater Cincinnati (> 50% FTTP) • We are winning against national competitors where we have fiber, with 40% Fioptics internet penetration • Opportunity to replicate our fiber success in Hawaii, which has fiber to approximately 65% of the addresses on Oahu
We Are Investing Where We Are Winning… Entertainment & Communications
1 32 3
Source: Company filings and Capital IQ (as of Dec 31, 2017) [1] Excludes Level 3 and adjusted for data centers [2] Pro forma for FairPoint [3] Historicals reflect actuals and are not adjusted to pro forma Verizon CTF, ELNK or Broadview [4] CBB reflects 50 Mbps or more; CTL reflects 40 Mbps or more as of Q2 2016 [5] Not pro forma for Level 3 or EarthLink [6] Expects 20% of homes with GPON / 1 Gbps by 2019
Fiber Availability
$254 $310 $327
Fioptics Revenue
($ in mm) LTM Y/Y Q2 2018 Y/Y
Revenue $327 +15% $85 +11% % of E&C Revenue 47% 49%
Internet Subs (000s) 235.3 +10% % Penetration 40%
Video Subs (000s) 145.1 +2% % Penetration 25%
6
Uses
Cash & Equivalents
Revenue
$1,289
Cash to Shareholders
214
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18
Less: Cash Used
(387)
Li, Jessica: Li, Jessica: 18.45 cash consideration Includes Cash for RSUs
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Less: OnX Contribution3
Cash for RSUs
Pro Forma Cash & Equivalents
614
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
Fees & Other
Cash to B/S
CBB Cash
AR Facility
29
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
Total
529
42.394
Plus: HCOM
Shares Issued to HCOM
Caylor, David: Caylor, David: 10k, at 12/31/17
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18
Plus: Run Rate Synergies5
Li, Jessica: Li, Jessica: Introducing the new CBB IP Appendix
Options Dilution
ERROR:#NAME?
ERROR:#NAME?
14
Li, Jessica: Li, Jessica: HCOM 2017 10k, pg 53 OnX: Introducing the new CBB IP Appendix CBB 2017 Q4 IP pg 13
Pro Forma Adj. EBITDA excl. SBC
$460
ERROR:#NAME?
1. Assumes as if the transaction were completed based on year end balance sheets at 12/31/17 and latest share count numbers from public filings; cash used and AR draw include $25mm of fees
2. Includes $155mm of preferred stock liquidation amount
3.Since close of OnX transaction on Oct. 2, 2017
4. Based on fiscal year end April 30, 2017 audited financials for OnX
5. Includes $11mm and $10mm for HCOM and OnX respectively
6. Includes $3mm and $5mm for HCOM and OnX respectively
Options Table
Caylor, David: Caylor, David: 10k
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 6
Li, Jessica: Li, Jessica: Introducing the new CBB IP pg 10
HCOM Shares
7.558
Caylor, David: Caylor, David: HCOM outstanding shares as of 10k, 1/31/18, x exchange ratio
Li, Jessica: Li, Jessica: 2017 Q4 PR including SBC
Li, Jessica: Li, Jessica: Introducing the new CBB IP Appendix
Li, Jessica: Li, Jessica: HCOM 2017 10k, pg 53 OnX: Introducing the new CBB IP Appendix CBB 2017 Q4 IP pg 13
Diluted Shares Oustanding
$519
Sheridan, Philip: Sheridan, Philip: All 2010 data from Form 8-K 2/9/12 Note: 8-K 2/15/11 had listed Adjusted EBITA at 501.6
$545
Sheridan, Philip: Sheridan, Philip: All 2011 data from Form 8-K 2/27/13
$535
Sheridan, Philip: Sheridan, Philip: All 2012 data from Form 8-K 2/20/14
$416
Sheridan, Philip: Sheridan, Philip: All 2013 data from Form 8-K 2/19/15
$330
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16
$302
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
$305
$446
330
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16 Note Form 8-K 2/19/15 stated: Adjusted EBITDA: 379.2 Wireless EBITDA: 44.4 Ex Wireless: 334.8
302
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
305
446
Sheridan, Philip: Sheridan, Philip: Taken from 10ks
Sheridan, Philip: Sheridan, Philip: All 2013 data from Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
Sheridan, Philip: Sheridan, Philip: Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: Form 8-K 2/15/18
Sheridan, Philip: Sheridan, Philip: All 2014 data from Form 8-K 2/18/16 Note Form 8-K 2/19/15 stated: Adjusted EBITDA: 379.2 Wireless EBITDA: 44.4 Ex Wireless: 334.8
3
4
5
5
3
4
5
14
$432
$461
$455
$357
$333
$306
$310
$460
Sheridan, Philip: Sheridan, Philip: All 2015 data Form 8-K 2/15/17
$81
$77
$24
$5
$58
$7
Sheridan, Philip: Sheridan, Philip: Note Cash was 7.6 in Form 8-K 2/18/16
$10
$10
2,524
2,534
2,689
2,265
1,701
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,784.2 in Form 8-K 2/19/15
1,238
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,245.6 in Form 8-K 2/18/16
1,207
1,900
Li, Jessica: Li, Jessica: From old CBB IP
Sheridan, Philip: Sheridan, Philip: Note Cash was 7.6 in Form 8-K 2/18/16
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,784.2 in Form 8-K 2/19/15
Sheridan, Philip: Sheridan, Philip: Note total Debt was 1,245.6 in Form 8-K 2/18/16
4.5x
5.0x
5.4x
5.0x
4.1x
3.9x
Difference
0.8x
0.8x
0.9x
0.9x
-0.0x
-0.1x
-0.1x
5.7x
5.3x
5.9x
6.3x
4.9x
4.0x
3.9x
4.1x
5.9x
5.6x
6.0x
6.4x
5.2x
4.1x
4.0x
Note: CBB began reporting Adjusted EBITDA excluding wireless in the February 2015 8-K
2018E Midpoint
CIQ_LinkingNames
CIQANR_057fb8fa751340ae96ef8be95bc585e7
2017 Rev
% 2017 Change
4142
380
2409
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
2017 Q4 Rev
Li, Jessica: Li, Jessica: PF for EarthLink
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
3966
356
2217
Li, Jessica: Li, Jessica: Incl CTF 2017 Q4 IP pg 24
% 2017 Q4 Change
Capex
$211
86
125
2018
$200
100
100
Total
$2,133
$1,229
$904
CNSL
WIN
FTR
FY2015
$284
$2,872
$250
FY2016
286
2,900
242
900
1,401
FY2017
211
2,872
227
839
1,188
Total Capex
$17,900
$1,635
FY2016
769
16,876
1,568
6,369
10,255
FY2017
790
16,103
1,461
6,002
9,128
Total Revenue
Li, Jessica: Li, Jessica: 2017 10k pg F-6
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 14
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 14
Li, Jessica: Li, Jessica: (ex Level 3)
Li, Jessica: Li, Jessica: Including Fairpoint
Li, Jessica: Li, Jessica: PF for EarthLink
17.0%
15.4%
11.3%
2010 2011 2012 2013 2014 2015 2016 2017 2018 115 200 312 117 89 104 106 86 100
2010 2011 2012 2013 2014 2015 2016 2017 2018 35 56 55 80 93 180 180 125 100
150 256 367 197 182 284 286 211 200
0.32100000000000001 0.16989327620432793 0.15430603028652545 0 0.11303208906352324
2015
2016
2017
$1,460.6
$4,663.5
$379.8
356.36
% YOY Change
$719.6
2015
2016
2017
Revenue
17,900.0
17,470.0
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
16,297.0
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
4,289.0
3,964.0
David Caylor: David Caylor: Assumed equal
Li, Jessica: Li, Jessica: 2017 Q4 Non-GAAP Financials report pg 4 Revenues less Level 3
David Caylor: David Caylor: 8k dated 9/19/17
Li, Jessica: Li, Jessica: 2017 Q4 ER
(594.0)
(194.0)
(147.0)
2.0
(4.6%)
(4.2%)
Capex
CTL
$2,872.0
$2,958.0
$2,886.0
Li, Jessica: Li, Jessica: PF for capex excluding integration of Qwest & Level 3
Data centers
David Caylor: David Caylor: Assumed equal
Li, Jessica: Li, Jessica: PF for capex excluding integration of Qwest & Level 3
Li, Jessica: Li, Jessica: 2017 Q4 ER
Li, Jessica: Li, Jessica: 2017 Q4 ER
(58.0)
(14.0)
2013
2014
2015
2016
2017
$359
$442
$537
$637
$705
Legacy Revenue
Strategic Revenue
2012 2013 2014 2015 2016 2017 305.60000000000002 358.6 441.7 536.6 637 705 Legacy Revenue 2012 2013 2014 2015 2016 2017 494.7 447.8 414.3 366.9 312.7 271.5 Integration
2012 2013 2014 2015 2016 2017 219.2 236.1 305.5 264.3 235.6 312 Total
2012 20 13 2014 2015 2016 2017 1019.5 1042.5 1161.5 1167.8 1185.3 1288.5
IT Services
Top Provider
4.4%
2
Accenture
4.0%
3
Deloitte
3.0%
4
HPE
2.6%
5
Li, Jessica: Li, Jessica: From IPs Not includisve of eliminations
316
344
433
435
431
362
CBTS Revenue
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 362 OnX Revenue
2012 2013 2014 2015 2016 2017 150 Total
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 512
CBTS 2017 PF Revenue Mix2
Cloud Services Professional Services Management & Monitoring Unified Communications Telecom & IT Hardware 53.5 114.6 21.1 42.3 280.3
_CIQHiddenCacheSheet
2
2016
2017
2018
2019
2020
2021
Li, Jessica: Li, Jessica: 2017 Cisco VNI Forecast pg 6
65,942
83,371
102,960
127,008
155,121
187,386
33,647
42,267
51,722
62,330
73,741
85,047
Fixed internet 2017 2018 2019 2020 2021 83371 102960 127008 155121 187386 Managed IP 2017 2018 2019 2020 2021 27140 31304 35226 39908 42452 Mobile data 2017 2018 2019 2020 2021 11183 16646 24220 34382 48270 Total
228,411
5G
2016
24,917
25
2017
73,704
74
2018
124,592
125
2019
186,076
186
2020
259,853
260
2021
350,227
350
2022
454,786
455
CAGR
62%
Towers
Small Cells / Tower 2016 2017 2018 2019 2020 2021 2022 0.16283918021644794 0.47690655209452204 0.78651600277760247 1.1404371115823537 1.5432258600927646 2.0095996603108843 2.5335561683518564
Revenue Mix
Li, Jessica: Li, Jessica: CBB 2017 Q4 IP pg 23
FY2017
13%
Li, Jessica: Li, Jessica: CBB 2017 Q4 IP pg 23
32%
22
10%
Li, Jessica: Li, Jessica: Presidio Oct 2017 IP pg 8 Gartner Info security backup
Tech Consulting & Implementation
3%
Services
IT Services & Hardware
Sheridan, Philip: Sheridan, Philip: All Data in this table taken from 8-Ks
$316
$344
$433
$435
$431
$512
$233
$143
$168
Li, Jessica: Li, Jessica: Per CBB Management
Sheridan, Philip: Sheridan, Philip: All Data in this table taken from 8-Ks
Li, Jessica: Li, Jessica: Per CBB Management
Li, Jessica: Li, Jessica: Per CBB Management
$205
$225
$232
$78
43%
42%
39%
47%
52%
45%
33%
Total Services Revenue1
2012 2013 2014 2015 2016 2017 135 143 168 205.2 225 231.5
2012 2017 0.42762115932847644 0.45232512700273542
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 361.8 OnX
2012 2013 2014 2015 2016 2017 0 0 0 0 0 150
2012 2013 2014 2015 2016 2017 315.7 344.1 433 435.4 430.7 511.8
Slide 6
Li, Jessica: Li, Jessica: 2011 Q4 10k IP pg 6
47
$68
$142
$191
$254
$310
$327
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
1059
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
1162
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
ERROR:#NAME?
ERROR:#NAME?
ERROR:#NAME?
198
Li, Jessica: Li, Jessica:
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: 2014 annual report pg 1
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: Excluding wireless Q4 2014 pg 7
Li, Jessica: Li, Jessica: 2017 Q4 IP pg 8
235
145.1
+2%
% Penetration
25%
Fioptics Revenue 2010 2011 2012 2013 2014 2015 2016 2017 LTM 27.976190476190478 47 68.2 100.8 142 191 254 310 327.30137301000002
Internet Subscribers
2010 2011 2012 2013 2014 2015 2016 2017 27 39 57 80 114 154 198 235.3 Video Subscribers
2010 2011 2012 2013 2014 2015 2016 2017 28 40 55 74 91 114 138 145.1
2010 2011 2012 2013 2014 2015 2016 2017 55 79 112 154 205 268 336 380.4
Slide 10
Slide 11
Customer Name
Franciscan Alliance
$48K MRR or $2.91M
$14K MRR or $840K
06/18
06/18
05/18
08/18
08/18
18-Nov
09/18
Hosted UC
Description
4 site Proof of concept prior to implementing the remaining location. Offering quality of experience for phone & enhancement of video conferencing & important business applications
Newest UC platform, cloud networking, & enhancement to business applications
# of Profiles
# of Contact Center Profiles
Takeitha Lawson: Employee Profile Type call center vs. staff employee (needs separate profile)
100
50
First site scheduled to be installed this month
Minimum is 400
Slide 11a
Li, Jessica: Li, Jessica: From IPs Not includisve of eliminations
317
331
386
CBTS 2017 PF Revenue Mix2
Cloud Services Professional Services Management & Monitoring Unified Communications Telecom & IT Hardware 53.5 114.6 21.1 42.3 280.3
Slide 13
2017 LTM 330.83883954999897 386.30625633999898
22.2%
22.2%
17.8%
22.2%
22.2%
10.4%
60.9
8.0
Average Age Average Tenure % Women (2 most common headcount) % Minority (1 most common headcount) Board Independence 0.60888888888888881 0.24 0.22222222222222221 0.22222222222222221 0.77777777777777779
Growth in Network Capacity and Speed Demands 5G and Small Cell Opportunity
• Market opportunity for 5G acceleration
– Verizon plans to deploy 8k to 10k small cells in Boston, investing $300 million over six years
– AT&T plans to launch mobile 5G in 12 U.S. markets this year
• UBS research estimates 500x increase in small cell sites to support 5G densification in NYC, based on mmWave spectrum and 100 meter propagation distance
25 74
125 186
260 350
Small Cells (000s)
Source: Nokia, Wall Street research and news articles [1] Cisco VNI Forecast as of 6/6/17 [2] G. Fast is “Fast access to subscriber terminals” and is a standard to offer fiber-like speeds over copper wires [3] VDSL stands for “very high bit rate digital subscriber line” and is digital subscriber line technology that provides data transmission faster than asymmetric data subscriber lines [4] SNL Small Cell and Tower Projections as of 8/30/17
Entertainment & Communications
Cincinnati Bell is Well-Positioned to Capitalize on IoT and wireless 5G Opportunities
…Which Creates Competitive Advantages And Future Growth Opportunities
2 3
Speed Capability (Mbps) 4
Not a matter of “IF” high bandwidth is necessary but a matter of when not having it makes you irrelevant
121,694 150,910
186,454 228,411
278,108
2017 2018 2019 2020 2021 Fixed internet Managed IP Mobile data
300~200 - 300
5G WirelessCable (DOCSIS 3.1)
• Adds operational scale and expands our metro-fiber fiber footprint and commercial opportunity in Hawaii • Opportunity to continue fiber investment in Hawaii – currently 65% coverage in Oahu, with opportunity to continue
Oahu build and invest in other islands where ROI makes sense • 2.6TB of Trans-Pacific fiber cable capacity connecting Asia and U.S.
• Hawaii’s fiber-centric technology leader providing voice, video, broadband, data center and cloud solutions • Incumbent position with strong brand equity
• Closed on July 2, 2018
• ~$11M annually (to be realized within two years post-close, excluding potential revenue synergies from cross-selling opportunities)
Hawaiian Telcom 2Q18 ResultsHawaiian Telcom Network Map
Completion of the Hawaiian Telcom Merger
Business Description
Expected Cost Synergies
Combination with Hawaiian Telcom Represents Opportunity to Scale CBB’s Fiber Success in Another Attractive Market
• Fiber is available to more than 65% of the available 325,000 homes and businesses on the island of Oahu
($ in millions) 2Q18 Y/Y Q/Q
Revenue $89 - 2% Flat
Consumer $34 -1% Flat
Business $40 -4% +2%
Wholesale $13 Flat -9%
Other $2 -12% +10%
8
9
Acquisition of OnX, Creating a Leading North American IT Services Provider…
Growth Opportunity
Business Description
Expected Cost Synergies*
• Expansion of geographic footprint and addressable market beyond Cincinnati to accelerate momentum in IT services
• Attractive enterprise customer base adding diversification and cross-selling opportunities
• Closed on October 2, 2017 • 2Q18 YTD Contribution: − $90M in revenue
• OnX provides industry-leading technology services and solutions to enterprise customers in the U.S., Canada and the U.K.
• ~$10M annually *To be realized within two years post-close, and excluding potential revenue synergies from cross-selling opportunities
Offices
Key Technology Partners / Certifications
Combined IT Services business with a diversified customer base and increased geographic footprint
IT Services & Hardware
Growing Markets
…which Positions Cincinnati Bell to Tap Into a Fragmented and Growing IT Services Market…
Scaling to Create Strategic Flexibility
Q2 ’18 YTD Service Revenue Mix
[1] Based on Gartner research; Market defined as 2016A North America IT Services market [2] Based on Gartner research [3] Market size in billions, figures represent North America estimates [4] Includes cloud-based conferencing, telephony and messaging
Other Service Providers 71%
Market2 2017 Market Size3
Cloud-Based Unified Communications4 $109 13% IaaS (Cloud) 18 32% Enterprise Security Services 22 10% Tech Consulting & Implementation 120 3%
10
• Launched nationwide SD-WAN and NaaS products
• Reorganized segment adding CLEC commercial operations to highlight strength of growing UCaaS business
• Continued demand for Communications services– recent 2Q18 YTD wins:
• UCaaS contract hosts 32,000 profiles across 96 locations (1Q18)
• SD-WAN project delivers service to approximately 50 sites (2Q18)
• SD-WAN, NaaS and UCaaS deal hosts approximately 300 profiles at 30 sites
1
1
[1] Includes OnX as of October 3, 2017 [2] Pro Forma revenue includes OnX revenue for the twelve months ended December 31, 2017 as disclosed in Cincinnati Bell’s 2017 Form 10-K
Creating Hybrid IT Solutions Provider Well Positioned to Capitalize on Significant Market Opportunities Presented by UCaaS, Cloud, Security, and Infrastructure Needs
IT Services & Hardware
Diversifying Customer Mix
33%
<10%
12
1,500+ Employees
2,400+ Customers
Note: Figures shown as of 12/31/17
IT Services & Hardware
Strategic Revenue Growth
Disciplined Capital Allocation Strategy
• Investments in fiber and IT solutions create platforms for long-term value
• Monetized CyrusOne and wireless assets – improved leverage profile from ~6x in 2013 to ~4x in 2017
• Ability to fund fiber investments through cash flow
($ in millions)
• Completed internal reorganization leading to two distinct business units, with the appropriate scale, structure and leadership committed to driving their respective brands forward
• Reporting changes beginning 1Q’18 to improve investors’ ability to appropriately value these services independently
– Entertainment and Communications segment is reported in the following three categories: Fioptics, Enterprise Fiber and Legacy
– IT Services and Hardware segment is reported in the following practices: Communications, Cloud, Consulting and Infrastructure Solutions (previously referred to as Telecom and IT Hardware sales)
% of Total Revenue
310 327
86 83
$331 $386
2017 LTM Fioptics Revenue Enterprise Fiber Revenue IT Services Revenue
$727 $796
Fioptics Revenue of
$168M +12% y/y
Total Revenue ($ in millions)
Adjusted EBITDA ($ in millions)
IT Services & Hardware Intersegment
IT Services & Hardware Corporate
Continued Strong Demand for Fiber
CBB continues to win with fiber in a very competitive environment
• Fioptics which includes a combination of FTTP and FTTN addresses, is available to 589,200 homes and businesses, or approximately 72% of Greater Cincinnati
• Cincinnati Bell offers FTTP to 55% of Cincinnati's total addressable market
Total Fioptics Subscribers (in thousands)
1. FTTP: fiber-to-the-premise 2. FTTN: fiber-to-the-node
25%
40%
18%
$91
$51
$30
Consumer Market Business Market
• Deployed fiber to the premise technology to 6,300 additional small business addresses across the islands year-to-date
• BVoIP and Ethernet growth generated 2% sequential revenue growth
Carrier Market
• Awarded major multi-year small cell contract with a large national wireless carrier to build 250 sites in the next 12-18 months
• 2Q18 sequential revenue decline primarily driven by pricing pressure from national wireless carrier
Capital Expenditures
addresses in Hawaii during 2H18
• $40M - $45M
• $175M - $185M
• 2Q18 sequential revenue growth from high-bandwidth fiber Internet and video offset declines in legacy voice and DSL
BVoIP (y/y) (q/q) Revenue 20% 5% Subscribers 13% 1% ARPU 5% 3%
Internet (y/y) (q/q) Revenue 14% 6% Subscribers 4% 1% ARPU 10% 5%
Video (y/y) (q/q) Revenue 4% 0% Subscribers 10% 4% ARPU -4% -2%
17
($ in millions) 2Q18 YTD Y/Y
Consulting $78 n/m
Cloud 46 14%
Communications 82 7%
Trusted provider of Voice services for more than 100 years
Momentum in Communications
IT Services & Hardware
Free Cash Flow & Capital Structure
1. Calculated as net debt divided by original 2018 Adjusted EBITDA Guidance (mid-point) as provided on February 15, 2018 2. Calculated as 2Q18 net debt actuals plus cash payments for Hawaiian Telcom merger divided by the sum of the original 2018 Adjusted EBITDA
(mid-point) provided on February 15, 2018 plus Hawaiian Telcom year-to-date June 30, 2018 results plus the mid-point of expected contribution from Hawaiian Telcom for 2H18
3. Excludes capital leases of $78 million as of period ending June 30, 2018
($ in millions)
Net Debt
Capital Structure3
2Q18 Actuals 2Q18 Proforma
2Q18 Y/Y YTD Change
Adjusted EBITDA (Non-GAAP) $159 $8 Interest Payments (64) (37) Pension and OPEB Payments (6) (1) Restructuring & Severance related payments (8) 9 Transaction and Integration Costs (4) (4) Income Tax Refunds 14 (3) Working Capital and Other (1) (5) Cash Provided by Operating Activities (GAAP) $90 ($33) Capital expenditures (71) 34 Restructuring & severance related payments 8 (9) Preferred stock dividends (5) - Transaction and Integration Costs 4 4 ( ) Free Cash Flow (Non-GAAP) $26 ($4)
• Merger with Hawaiian Telcom Cash payments totaled $560M including the repayment
of Hawaiian Telcom debt and merger related fees and expenses
Issued 7.7M new Cincinnati Bell common shares for Hawaiian Telcom merger consideration
$22
$625
• Flexible capital structure with strong liquidity
• No material maturities until 2024
19
Chart3
Bonds
$479
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 22.3 625 350 87.9 Term Loan B
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 600 AR Facility
$154
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 35
Financial Summary
FINANCIAL SUMMARY
($ in millions)
*Fiber to the Premise (FTTP), Fiber to the Node (FTTN)
IT SERVICES AND HARDWARE METRICS
QTD
310.4
310.9
308.7
307.9
235.3
232.8
226.6
221.2
$ 52
$ 51
$ 52
$ 53
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
$ 52
0.6
(0.3)
1.1%
-0.5%
$ 46
$ 47
$ 45
$ 45
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
$ 45
(0.9)
1.1
-2.0%
2.5%
2.1%
1.6%
1.7%
2.0%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
1.8%
0%
0%
25.8%
12.0%
1.2%
1.1%
1.1%
1.2%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
1.3%
0%
-0%
5.3%
-5.6%
3.0%
3.0%
3.3%
4.4%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
4.3%
0%
-1%
1.3%
-29.5%
678
672
665
659
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
654
6.4
24.7
1.0%
3.8%
83%
82%
82%
81%
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
80%
1%
3%
1.1%
3.9%
-9%
-9%
-9%
-8%
Christopher Glynn: Christopher Glynn: From CBT_AccessLines_5Qtr_CBT report in HFM (ER = Segment Metric Info).
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Steve Bessler: Steve Bessler: obtained via email from Doug Martin (Data Analytics)
Takeitha Lawson: ER
Takeitha Lawson: ER
(41,565)
(43,600)
(22,600)
(25,100)
(26,800)
2,035
(14,765)
-4.7%
55.1%
-15%
-15%
-19%
-20%
-20%
0%
5%
-0.3%
-26.4%
5,403
7,300
5,000
7,800
9,600
(1,897)
(4,197)
-26.0%
-43.7%
5%
7%
6%
10%
12%
-2%
-7%
-27.9%
-55.9%
Business
-10%
-10%
3%
2%
2%
-0%
-12%
2.3%
-601.1%
(22,567)
(22,900)
(23,600)
(25,600)
(25,900)
333.00
3,333
-1.5%
-12.9%
-13%
-12%
-12%
-13%
-13%
-0%
0%
2.2%
-2.1%
14%
19%
26%
25%
30%
-5%
-16%
-26.7%
-54.7%
Total
-9%
-3%
-1%
-2%
-2%
-7%
-7%
257.5%
370.4%
348.238
384.4
145
122
493
507
-13
-0.0265686516
Year
FTTP
FTTN
FTTP
FTTN
Year
FTTP
FTTN
FTTP
FTTN
1
33%
22%
22%
17%
1
32%
15%
24%
11%
2
38%
32%
24%
15%
2
34%
29%
23%
18%
3
38%
24%
26%
18%
3
38%
30%
24%
22%
4
47%
26%
28%
22%
4
47%
26%
30%
23%
* Low FHSI penetration for FTTN 48+ months due to low MDU penetration for areas released 48+ months ago
Capital
1,165
1,150
Takeitha Lawson: Plan has $876 but Mike believes it will be higher ~ $900 due to some risks.
1,335
879
1,065
1,128
(500)
(224)
(170)
1,258
1,065
1,016
32
59
$ 5.0
$ - 0
2.6
77.8
80.0
$ 265.8
$ 302.2
80.4
80.7
$ (6.4)
$ (5.4)
(2.60)
(0.70)
Entertainment & Communications 2Q17 2Q18 176 173.9 One Time Fiber Build Project 2Q17 2Q18 5 0 IT Services & Hardware 2Q17 2Q18 84.8 128.30000000000001 Intersegment 2Q17 2Q18 -6.4000000000000341 -5.4000000000000341
Entertainment & Communications 2Q17 2Q18 70.300000000000011 66.400000000000006 One Time Fiber Build Project 2Q17 2Q18 2.6 IT Services & Hardware 2Q17 2Q18 7.5 14.3 Corporate 2Q17 2Q18 -2.6 -0.70000000000000284
$85
$174
$181
-$5.4
-$6.4
$297
$260
$72
$8
$14
$66
$80
-$1
-$2
-$72
$128
FTTP
Non-FTTP
Fioptics
49%
$1
3%
-17%
Legacy
$68
$79
($11)
-14%
-14%
Total
$174
$176
($2)
-1%
-4%
Slide 9
$214
$143
$102
$108
$145
$235
$235
415
141
140
449
557
589
Cloud
18%
Communications
33%
Consulting
31%
Consulting
40
31%
Cloud 18%
Communications 33%
Consulting 31%
Slide 12- FCF Schedule
Cash Interest Payments Rollforward - June 2018
Takeitha Lawson: Takeitha Lawson: <K:\acctg\SEC Filings\2018 SEC Fillings\Q2\Cash> Interest Payments; "Cash Interest Payments Rollforward - June 2018.xlsx"
Pension and OPEB Payments
Working Capital and Other
$90
($33)
$123
Takeitha Lawson: Takeitha Lawson: Referenced as rounding in Q217 presentation
Fx/Plug
Takeitha Lawson: Takeitha Lawson: Stock Based Comp on Q217 presentation
Takeitha Lawson: Takeitha Lawson: <K:\acctg\SEC Filings\2018 SEC Fillings\Q2\Cash> Interest Payments; "Cash Interest Payments Rollforward - June 2018.xlsx"
-33
0
$26
($6)
$30
29
(0.10)
1.90
- 0
-4
6/30/18
600.0
22.3
625.0
350.0
77.9
1,346.00
1,929.00
* Leverage increased due to not having HCOM & only 1 quarter of OnX EBITDA on the books
CBB Standalone
Slide 12- Debt Maturity
600
Bonds
22.3
625
350
87.9
Bonds
$479
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 22.3 625 350 87.9 Term Loan B
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 600 AR Facility
$154
2018 2019 2020 2021 2022 2023 2024 2025 Thereafter 35
Revised Guidance
Capital Expenditures
Actuals/Revised Target $71 $230 – $255
• Invested $38 million in Fioptics year-to-date, passing an additional 17,000 new addresses
• Expect to pass 40,000 new addresses during 2018, up from original 35,000 target
• Hawaiian Telcom plans to pass an additional 1,000 addresses on Oahu and 1,000 addresses on neighbor islands during 2H18
YTD 2Q18 FY 2018 Guidance
Construction $15 $35 – $45
Installation 18 45 – 50
Enterprise Fiber 8 20
($ in millions)
Actuals/Original Target $71 $190 – $210
Total Hawaiian Telcom – $40 – $45
20
2018 Outlook
• Updated previous 2018 financial guidance to include the merger with Hawaiian Telcom, which closed on July 2, 2018
• Revenue guidance reflects adoption of new revenue recognition standard Infrastructure Solutions sales recognized
net of product cost
Capital Expenditures $230M – $255M
Interest payments $120M – $130M
Impact of New Revenue Standard
($ in millions) Revenue
Revenue Guidance “Pre ASC 606” $1,880 – $1,965
Revenue Adjusted EBITDA
21
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