Keynote Address Canadian Telecom Summit Toronto Congress Centre June 18, Pierre Blouin Chief Executive Officer MTS Allstream Inc.

Transcription

1 CHECK AGAINST DELIVERY Keynote Address 2008 Canadian Telecom Summit Toronto Congress Centre June 18, 2008 Pierre Blouin Chief Executive Officer MTS Allstream Inc.

2 2 Good morning everyone. I m glad to be back at the summit in a time where the Canadian telecom industry has been the source of high drama in the past year. From the Spectrum Auction to the Supreme Court of Canada telecom has been making news in a way we haven t seen for a long, long time. I would love nothing more than to share my thoughts today on both of those topics, but doing so would be against the strict rules laid down by Industry Canada for auction participants. It would also be off topic and the topic of today s conference, though arguably less exciting, is more important than the auction or the potential buyout of BCE. Customer relevance should be an oxymoron, but apparently it isn t. What is a customer if not relevant? What is relevant, if not a customer?? One of the things I ve learned at MTS Allstream is that when you re smaller, you try harder. I will tell you that customers are very relevant. And when customers are your orientation, you focus on things differently. You focus on relationships. And you focus on innovation. And that s what I m going to try to address in the next few minutes. Before I do, let me just say that life in wireless does not end with the auction. There is no guarantee of market success for anyone and competition doesn t mean that the players and who they partner with won t change. That s what competitive market forces mean. One thing we can be sure of is that the market will change and as I think Nadir Mohamed said earlier in this conference: the telecom market after the auction will be a new world for Canadians. Once the auction is over and we have had the opportunity to understand the landscape of new entrants better, we will be free to update you on our plans. Until then, I can t say much more than what we have long stated, that a competitive wireless sector has tremendous value for Canada. Over the past few years I spoke at this conference about how opportunities in our business would flow from: The changing regulatory structure improving competition. The power of technology in telecom to reshape our customers lives and businesses. 2

3 3 And how MTS Allstream has a unique position in the Canadian market to grow while continuing to deliver more value to our shareholders. All of this remains true as we move forward with the company. The challenge pose by our conference theme: maintaining relevance for the customer is always going to be the most compelling aspect of our business. And if it isn t, we are all in trouble. Before I explore this theme, though, I would like to provide a brief update on our transformation of MTS Allstream. It has been an amazing two and half years since I joined this company, and it has been a very positive story with more chapters to come. With our first quarter 2008 results, MTS Allstream has now delivered nine consecutive quarters of improving results, while continuing to deliver one of the highest dividend yields on the TSX. Why is this relevant? For two reasons: First, because so many in our industry have persistently and repeatedly counted MTS Allstream out. Second, because we have proven the skeptics wrong through discipline, yes, but also through a relentless focus on our customers. I am also pleased to say that we are more than holding our own against much larger national competitors. In fact, our first quarter operational results were recognized by some analysts as the best in Canada for an incumbent telco. Our divisions (Allstream & MTS) are now growing both their top line and bottom lines; and the strong results we achieved in the 1 st quarter support our growth outlook. Consider these other data points from our results: For the company as a whole, our next generation services wireless, high-speed Internet, television, converged IP and unified communications services grew by 18% year-over-year this is solid growth! Our Consumer division in Manitoba delivered last year the highest EBITDA margins and the strongest revenue growth in the Canadian industry for an incumbent telco competing against a cable operator. We have a 32% market share in our television service in the greater Winnipeg market. This is a tremendous achievement in just 4 years and we believe the best performance in North America for a telco delivering television services over its network. We will continue our innovation in this space, introducing a new IPTV platform later this year. Our fiber network in Manitoba is one of the deepest in North America and enables MTS to deliver bandwidth up to 26 Mbps to 95% of our customers in greater Winnipeg and we will soon deliver about 40 Mbps with the introduction of our new VDSL2 platform. This added to 3

4 4 the largest wireless footprint in Manitoba, reaching 97% of the population makes us a powerful market leader. Lets add to this that with its 5 residential products, being voice, wireless, Internet but also television and home security services, MTS offers the most complete bundle of home services in the country was a milestone year for our Enterprise division or Allstream. With its mid market focused strategy, it won $243 million in new contracts and returned to growth. A major contributor to the renewed vigor in Allstream has been our strong growth in next generation services like unified communications and IP-based connectivity. For example, the revenues from these products grew 27% in the first quarter of On the labour relations front, we have completed negotiations over the past 18 months for the renewal of four collective agreements with our union partners and are in the process of completing our fifth. This is a solid achievement and demonstrates the desire by all in our company to position the business for success. And if you are a shareholder, our earning per share grew 16% in 2007 and by close to 14% in the first quarter 2008 so our company is doing well. And that brings me to the heart of the matter today, because while past performance is important it s the future that counts. At MTS Allstream our mission is all about the customer and the customer experience. It is: to deliver true value as seen through the eyes of our customers. We are on a journey to make this mission much more than a statement; we aim to make it a way of life for our company, and our employees. We are not there yet but we are working hard at it. What customers want regardless of market segment is how they view their experience of interacting with our company. In this regard, we believe we have the capabilities to provide the value that our customers are seeking. We also have the track record, with 100 years of history and numerous telecom firsts, from the first alldial service for a major city in North America Winnipeg in 1926 to the first coast to coast next generation IP MPLS VPN network in Canada, This is a competitive advantage that MTS Allstream has in the Canadian market. We have indeed a unique market position. 4

5 5 We are a large enough service provider by any standard and a national competitor with the scope and scale that address the most complex requirements across our market segments. But, at the same time, I believe we have the entrepreneurial outlook and the energy of a smaller company. This is not something you see with our major national competitors. So based on this unique position, how can we define relevance? Is it just a matter of giving customers more for less? Price is always a key element yes you have to be competitive and we are. But there are several other factors at work with our company: all serving our mission of delivering value as seen through the eyes of our customers. The first factor is the combination of our people and our network. Listening to real customer problems and attempting to shape our solutions to solve those problems as opposed to rigid product approaches, is something that sets MTS Allstream really apart. Just this week, MTS Allstream was recognized with the Microsoft Partner of the Year award for Information Worker Solutions and Unified Communications. This is a global award, chosen from over 2000 submissions world-wide. This is a significant achievement for our Company. It is a symbol of the innovative course MTS Allstream is charting and of our ability to work with others and deliver on our promises. A second factor which you see in our history is a 100 year tradition of being an innovator, of driving change. We are a company with tremendous experience but it is experience in embracing the new and in being forward-looking. If you look around, many companies sell themselves as innovators but how many of them have a long tradition of that? As I mentioned earlier, our history is full of product innovations. And there is more to come as we continue to look for ways of packaging next generation technologies into services for customers we serve. Not being an incumbent nationally gives us an important competitive advantage as Canada is a Greenfield opportunity for Allstream without being slowed down by incumbency. A third factor is execution. Whether rolling out a complex multi-point MPLS network or delivering a gigabit Ethernet private line, we pride ourselves on doing what we say we will do, and we are known for it! 5

6 6 Are we perfect? No. But we constantly strive to improve. Our measures of success are not based on classical 5 nine s of availability but rather on real customer feedback. What it adds up to is that our demonstrated ability to manage change sets us apart in a dynamic way that we intend to build on going forward. Here are a few examples to make it real for all of you: It may be difficult to imagine parking management as a hotbed for innovative solutions. But that is just what happened in Calgary. As the communications provider and systems integrator, Allstream helped the Calgary Parking Authority develop the Park Plus System. This solution combines environmentally friendly solar powered parking stations with the convenience of wireless communications and eliminating the need for paper display tickets. Launched last summer, the Park Plus System allows people parking in Calgary to use their cell phone to pay for their parking space. A SMS message will tell them when their time is nearly expired, giving them the option to purchase more time. I don t think parking will ever be a perfect experience but this is an example of how it can be made much more convenient by harnessing the power of telecommunications. Another example of our solutions in action. We are working together with the Ministry of Justice in Ontario to install videoconferencing equipment in the courts and jails in the province. This equipment will allow court suspects to make appearances in court right from the corrections facility, and providing the potential for savings in terms of time, travel and security costs for the justice system. One last example is in our Consumer business, where we continue to innovate and try to put the customer in control. Our TV service already allows our subscribers to check , or show photos, right on their TV. We have continued innovating on this product with the MTS TV Channel Changes service. A Web site allows customers to log in, and make changes to the channel packages they have subscribed to. The changes take only a short time in fact, they are already made by the time the customer returns to their tv. These are just a few examples of the power of new technologies and how MTS Allstream stands apart far apart, in my opinion, from our competition. 6

7 7 I am proud to add that we are a company that is working to make a difference when it comes to our social and environmental contribution. We invest in many initiatives everywhere we operate in Canada. For the 8 th year now, MTS Allstream has been recognized as one of Canada s top socially responsible corporate citizens by being included on the Jantzi Social Index for That consists of 60 Canadian companies that pass a set of environmental, social and governance screens. I am very proud we are on this important list. Like many of you, our company is working to reduce its environmental impact. I want to take a moment to highlight just a few examples: We have initiated our teleworking program and we participate in municipal program which subsidize employees who take public transit to work. We operate a phone recycling program throughout Manitoba, diverting up to 1,000 cell phones from landfills each month. We are migrating our Manitoba customers to a single bill, reducing our printing output by several million bills per year. These are just a few examples of what we do. We are proud to make our own contribution toward environmental improvement, and for a company of our size, we feel it is a strong one. While I believe environmental issues have not yet reached a critical mass when it comes to the decision making of telecom suppliers, it is something we see growing more and more every year. Earlier, I mentioned a few of the many telecom firsts that our company is proud to have as part of its history. I am confident that we have many more firsts ahead of us as well. We have a unique position in the market being a market leader in Manitoba and a nimble national competitor in the business market across Canada. I am confident MTS Allstream will continue to blaze a successful trail in the Canadian telecom market. This is a trail that will be defined by innovation, not incumbency. Thank you. 7