Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer...
-
Upload
marcia-cobb -
Category
Documents
-
view
218 -
download
0
Transcript of Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer...
![Page 1: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/1.jpg)
open >access choice support freedom community
Jeff GardnerSr. Vice President & Chief Financial Officer
Raymond James & Associates 24th Annual Institutional Investors Conference
The Hyatt Regency Grand Cypress Orlando, Florida
March 3, 2003
![Page 2: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/2.jpg)
This presentation includes certain estimates and other forward-looking
statements, including statements with respect to anticipated operating and
financial performance, growth opportunities and growth rates, acquisition and
divestiture opportunities, and other statements of expectation. Words such as
“expects,” “anticipates,” “intends,” “plans,” “believes,” “assumes,” “seeks,”
“estimates,” and “should,” and variations of these words and similar
expressions, are intended to identify these forward-looking statements.
Forward-looking statements are subject to uncertainties that could cause
actual future performance, outcomes and results to differ materially. These
statements by the Company and its management are based on estimates,
projections, beliefs and assumptions of management and are not guarantees
of future performance. The company disclaims any obligation to update or
revise any forward-looking statement based on the occurrence of future
events, the receipt of new information, or otherwise.
“Safe Harbor” Statement“Safe Harbor” Statement
![Page 3: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/3.jpg)
2002 Highlights2002 Highlights
• Equity Free Cash Flow1 growth of 21% to $996 million
• Return on Equity of 17%
• EPS from current businesses increased 14%2 to $3.24
• Wireless revenue growth of 9%
• Wireline revenue growth of 11%
• Raised our dividend for the 42nd consecutive year
1 Defined as Net Income + Depreciation & Amortization - Capital Expenditures2 Reflects January 2002 implementation of SFAS 142
![Page 4: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/4.jpg)
Investment HighlightsInvestment Highlights
Solid Financial
Performance
Solid Financial
Performance
Industry Leading Results
Industry Leading Results
Conservative Capital
Structure
Conservative Capital
Structure
Strong Platform for Continued
Growth
Strong Platform for Continued
Growth
Strategic Model
Strategic Model
![Page 5: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/5.jpg)
Strategic ModelStrategic Model
• Operational Focus
Operational Focus
• Point of Sale Experience• Customer Service
Experience• Network Quality
Experience
![Page 6: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/6.jpg)
Strategic ModelStrategic Model
• Operational Focus
• Financial Discipline
Operational Focus
• Point of Sale Experience• Customer Service
Experience• Network Quality
Experience
Financial Discipline
• Invest in Businesses Not Products
• Best Customer/Best Price
• Stay Relevant
![Page 7: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/7.jpg)
Strategic ModelStrategic Model
• Operational Focus
• Financial Discipline
• Opportunistic Growth
Operational Focus
• Point of Sale Experience• Customer Service
Experience• Network Quality
Experience
Financial Discipline
• Invest in Businesses Not Products
• Best Customer/Best Price
• Stay Relevant
Opportunistic Growth
• Focus on Free Cash Flow
• Operational “Fit”• Think Long-Term (5+
years)
![Page 8: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/8.jpg)
ALLTEL Wireless
Verizon & Other Roaming
Agreements
Strong Platform for Continued Growth Wireless Markets as of 12/31/02 – A Closer LookStrong Platform for Continued Growth Wireless Markets as of 12/31/02 – A Closer Look
• 7.6 million customers• 59 million POPs
![Page 9: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/9.jpg)
ALLTEL Wireless
Verizon & Other Roaming
Agreements
Strong Platform for Continued Growth Wireless Markets as of 12/31/02 – A Closer LookStrong Platform for Continued Growth Wireless Markets as of 12/31/02 – A Closer Look
Customers
Tier 2 & 3• Fewer Competitors• Higher Revenue Growth• Lower Churn• Better EBITDA Margins
• 7.6 million customers• 59 million POPs
![Page 10: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/10.jpg)
ALLTEL Wireless
Verizon & Other Roaming
Agreements
0%
10%
20%
30%
40%
50%
60%
1st Qtr '02 2nd Qtr '02 3rd Qtr '02 4th Qtr '02
% of Gross Adds on Total/National Freedom Rate Plans
Strong Platform for Continued Growth Total/National Freedom Rate PlansStrong Platform for Continued Growth Total/National Freedom Rate Plans
Total/National Freedom Plans• Leverage Verizon roaming agreement• Net present values are significantly higher than other rate plans• ARPU is 20-40% higher• Approximately 20% of customer base is on a national plan
![Page 11: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/11.jpg)
Strong Platform for Continued Growth Local Network Coverage Matters Strong Platform for Continued Growth Local Network Coverage Matters
PCS Competitor vs. ALLTEL Local Package
![Page 12: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/12.jpg)
ALLTEL Wireline
ALLTEL Wireless
Verizon & Other Roaming
Agreements
Strong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer Look Strong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer Look
• 2nd largest independent ILEC• Almost 3.2 million customer lines
![Page 13: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/13.jpg)
ALLTEL Wireline
ALLTEL Wireless
Verizon & Other Roaming
Agreements
Strong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer LookStrong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer Look
• 2nd largest independent ILEC• Almost 3.2 million customer lines
• Less competitive pressure• Little exposure to UNE-P• Success with vertical and
enhanced services
• Over 1.5 million LD customers (almost 50%
penetration)
• 38%-42% vertical services penetration
• 70,000 DSL customers - 4.3% penetration of addressable lines
• More than 80% of DSL customers have
ALLTEL Internet Service
• Over 1.5 million LD customers (almost 50%
penetration)
• 38%-42% vertical services penetration
• 70,000 DSL customers - 4.3% penetration of addressable lines
• More than 80% of DSL customers have
ALLTEL Internet Service
![Page 14: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/14.jpg)
Strong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer LookStrong Platform for Continued Growth Wireline Markets as of 12/31/02 – A Closer Look
16,712
19,996
22,249
26,816
38,067
56,005
70,182
32,907
0
20,000
40,000
60,000
80,000
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02
1,160
1,212
1,240
1,265
1,364
1,462
1,542
1,318
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02
DSL Customers Long-Distance Customers
In t
hou
sand
s
![Page 15: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/15.jpg)
Industry Leading Results Wireless EBITDA MarginsIndustry Leading Results Wireless EBITDA Margins
EBITDA Drivers:• Direct Sales Channel is approximately 70%-75% of total sales• CDMA technology• Cash cost per customer competitive with companies with greater scale
Service revenue margin. Source: Company reports.
40%38%
34%
29%
25%
18%
38% 38%
32%
38%
30%
25%27%
34%
0%
10%
20%
30%
40%
ALLTEL Verizon Wireless Cingular Nextel US Cellular AT&T Wireless Sprint PCS
2001 EBITDA Margin2002 EBITDA Margin
![Page 16: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/16.jpg)
Industry Leading Results Wireless 4Q 2002 Industry Leading Results Wireless 4Q 2002
Market Penetration
Churn
Gross Gain per POPs
Cash Flow Margins
0.0%
0.5%
1.0%
1.5%
Verizon ALLTEL US Cellular AT&T Sprint PCS Cingular T-Mobile* Nextel
0.0%
4.0%
8.0%
12.0%
16.0%
Verizon ALLTEL USCellular
AT&T Cingular Sprint PCS Nextel T-Mobile*
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
Nextel USCellular
Verizon AT&T T-Mobile* Cingular ALLTEL Sprint PCS0.00%
15.00%
30.00%
45.00%
Nextel Verizon ALLTEL Cingular AT&T SprintPCS
USCellular
T-Mobile*
T-Mobile based on 1/28/03 news release.Source: Company reports
![Page 17: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/17.jpg)
Industry Leading Results Wireline EBITDA MarginsIndustry Leading Results Wireline EBITDA Margins
EBITDA Drivers:• Focused on second and third tier cities and rural markets• Convergence drives better margins
Source: Company reports.
58%
55%
51%
48%
41%
58%
55%
50% 49%
45%
40%
44%
0%
10%
20%
30%
40%
50%
60%
ALLTEL CenturyTel BellSouth Sprint FON Verizon SBC
2001 EBITDA Margin 2002 EBITDA Margin
![Page 18: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/18.jpg)
-4.5%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
ALLTEL CenturyTel Sprint Verizon BellSouth SBC
Industry Leading Results Wireline 4Q 2002Industry Leading Results Wireline 4Q 2002
Customer Growth* (vs. 4Q01)
0%
10%
20%
30%
40%
50%
60%
ALLTEL CenturyTel Sprint BellSouth Verizon SBC
Cash Flow Margin
* Excludes DSLSource: Company reports
![Page 19: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/19.jpg)
ALLTEL has one of the strongest credit profiles in the telecom industry• Well capitalized balance sheet
– A1 / Prime-1 / F1 (S&P / Moody’s / Fitch) Commercial Paper ratings– A / A2 / A (S&P / Moody’s / Fitch) long-term credit ratings
• Net Debt / EBITDA 1.7X
Conservative Capital StructureConservative Capital Structure
Source: Wall Street equity research and company filings.Note : Assumes 80% equity credit for AT, CZN, CTL and Sprint Equity Units. Q pf directories sale and debt exchange, Sprint pf directories sale, SBC pf Cegetel sale, VZ pf Northcoast. (a) Net Debt/EBITDA as of 12/31/02 except for CZN, NXTL and RCCC as of 9/30/02.
![Page 20: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/20.jpg)
Solid Financial Performance Delivering Consistent GrowthSolid Financial Performance Delivering Consistent Growth
$5.2$5.8
$6.5$7.2
$7.5$8.0
1997 1998 1999 2000 2001 2002
Revenue ($bn)
$1.8$2.1
$2.5$2.7
$2.9$3.1
1997 1998 1999 2000 2001 2002
EBITDA** ($bn)
$1.74
$2.14
$2.59 $2.72 $2.84
$3.24
1997 1998 1999 2000 2001 2002
Earnings per Share
$1.12$1.18
$1.24$1.29
$1.33$1.37
1997 1998 1999 2000 2001 2002
Dividends per Share
* *
*Not restated for new reporting standard.**Excluding merger and integration expenses.
![Page 21: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/21.jpg)
0
200
400
600
800
1,000
1,200
1997 1998 1999 2000 2001 200212%
16%
20%
24%
28%
Equity Free Cash Flow CAPEX as a % of Revenues
Millions
* Defined as Net Income + Depreciation & Amortization - CAPEX.
% of Revenues
$
15
*
Solid Financial Performance Strong and Growing Free Cash FlowSolid Financial Performance Strong and Growing Free Cash Flow
5-Year CAGR = 26%
![Page 22: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/22.jpg)
ALLTEL has performed better than the S&P 500 over the last 5 yearsALLTEL has performed better than the S&P 500 over the last 5 years
Assumes that $100 was invested on the last trading day of 1997 and that all dividends were reinvested.
Note - ALLTEL has raised dividends for 42 consecutive years - new annual dividend is $1.40 per common share “pre-tax”.
![Page 23: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/23.jpg)
Proposed Sale of Financial Services Division of AISProposed Sale of Financial Services Division of AIS
> Proceeds– $775M in cash– $275M in common stock
> Retaining Telecom Services Division ~10-12% of revenue and EBITDA
> Expect to close 3/31/03
> Proposed sale will– Improve telecom focus – Improve the balance sheet– Improve financial flexibility
> Expect $.22 dilution in ‘03 (9 months) assuming close on 3/31/03
![Page 24: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/24.jpg)
2003 Outlook2003 Outlook
> EPS from current businesses of $3.12 to $3.22– Includes $.22 of expected dilution from the proposed sale of
the financial services division of AIS– Includes $.08 of pension expense– Implies normalized growth rate of 6% to 9%
> Capital expenditures of $1.2 billion to $1.3 billion– Includes further deployment of CDMA coverage– Includes 1X data deployment
Source: 4Q02 Earnings Call on January 29, 2003
![Page 25: Open > accesschoicesupportfreedomcommunity Jeff Gardner Sr. Vice President & Chief Financial Officer Raymond James & Associates 24th Annual Institutional.](https://reader035.fdocuments.us/reader035/viewer/2022062314/56649ec15503460f94bcd98a/html5/thumbnails/25.jpg)