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Annual Shareholder Meeting

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Annual Shareholder Meeting. Little Rock, AR. April 21, 2005. 2 'Safe Harbor' Statement. This presentation includes statements about expected future events and future ... – PowerPoint PPT presentation

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Title: Annual Shareholder Meeting


1
  • Annual Shareholder Meeting
  • Little Rock, AR
  • April 21, 2005

2
Safe Harbor Statement and Regulation G
Disclaimer
  • Safe Harbor Statement
  • This presentation includes statements about
    expected future events and future financial
    results that are forward-looking statements
    within the meaning of the Private Securities
    Litigation Reform Act of 1995. ALLTEL claims the
    protection of the safe-harbor for forward-looking
    statements contained in the Private Securities
    Litigation Reform Act of 1995. Forward-looking
    statements are subject to uncertainties that
    could cause actual future events and results to
    differ materially from those expressed in the
    forward-looking statements. These forward-looking
    statements are based on estimates, projections,
    beliefs, and assumptions and are not guarantees
    of future events and results. Actual future
    events and results may differ materially from
    those expressed in these forward-looking
    statements as a result of a number of important
    factors. Representative examples of these factors
    include (without limitation) adverse changes in
    economic conditions in the markets served by
    ALLTEL the extent, timing, and overall effects
    of competition in the communications business
    material changes in the communications industry
    generally that could adversely affect vendor
    relationships with equipment and network
    suppliers and customer relationships with
    wholesale customers changes in communications
    technology the risks associated with pending
    acquisitions and the integration of acquired
    businesses adverse changes in the terms and
    conditions of the company's wireless roaming
    agreements the uncertainties related to ALLTEL's
    strategic investments the effects of litigation
    and the effects of federal and state legislation,
    rules, and regulations governing the
    communications industry. In addition to these
    factors, actual future performance, outcomes, and
    results may differ materially because of more
    general factors including (without limitation)
    general industry and market conditions and growth
    rates, economic conditions, and governmental and
    public policy changes.

Regulation G Disclaimer Todays presentation will
include certain non-GAAP financial measures. I
refer you to the Investor Relations section of
ALLTELs Web site where the company has posted
additional information regarding these non-GAAP
financial measures, including a reconciliation of
each such measure to the most directly comparable
GAAP measure. The companys Web site is located
at www.alltel.com.
3
2004 HighlightsSolid Earnings and Operating
Metrics
Revenue (in billions)
Operating Income (1) (in billions)
EPS (1)
10 yoy
3 yoy
3 yoy
7 yoy
2 yoy
5 yoy
(1) yoy
Wireless
Wireline
(3) yoy
59 yoy
86 yoy
(35 bp) yoy
(In thousands, excluding acquisitions)
(In millions)
(In thousands)
2003
2004
(1) From Current Businesses
4
First Quarter 2005 Highlights
Revenue (in billions)
Operating Income (1) (in millions)
EPS (1)
10 yoy
8 yoy
18 yoy
14 yoy
29 yoy
(6) yoy
(1) yoy
Wireless
Wireline
(21 bp) yoy
85 yoy
6 yoy
2 yoy
(In thousands)
1Q04
1Q05
(1) From Current Businesses
5
A Closer Look at ALLTELas of 3/31/05
1Q05 of Total Revenue 62 28 10
  • 1Q05
  • Wireless 8.8M
  • Wireline (ILEC CLEC) 3.0M
  • Long-Distance 1.8M
  • DSL 283K
  • Wireless
  • Wireline (ILEC, CLEC, Internet)
  • Communication Support Services

Business Mix
Customers
  • Wireless
  • 64M POPs
  • 2/3 of customers in Tier 2 and 3 markets
  • Wireline
  • 50 of our wireline is overlapped by our wireless

6
Strategic Model Access is Key and Wireless is
Driving Telecom 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)

1998
1999
2000
2002
2003
2005
360
Aliant/ Liberty
VZ Swap
VZ KY Access Lines/CTL Wireless
Sale of AIS
Cingular Properties/ Western Wireless
Shifting the Mix to Wireless
Other
Wireless
Wireline
Wireless
Other
Wireline
2004 Pro-Forma Revenue 10.3B(Pro-Forma
includes Cingular and Western Wireless)
1997 Revenue 3.3B
7
Strategic Model Driving Consistent Growth While
Maintaining Solid Credit Metrics
Revenue (bn)1
Earnings per Share1
Equity Free Cash Flow2
CAGR 6.9
CAGR 8.4
CAGR 23.3
  • ALLTEL Credit Metrics (3/31/05)
  • Net Debt / OIBDA 1.1X4
  • Net Debt / Total Cap 33
  • ALLTEL Credit Ratings3
  • A1 / Prime-1 / F1 - CP ratings
  • A / A2 / A - Long-term credit ratings

1 From Current Businesses 2 Equity Free Cash Flow
defined as Net Income Depreciation
Amortization Capital Expenditures 3 Ratings
from SP / Moodys / Fitch, respectively 4 From
current businesses OIBDA defined as operating
income before depreciation and amortization. Note
Assumes 80 equity credit for AT equity units.
8
Strategic Model Generating Leading Total
Returns(1)
  • Quarterly dividends have been raised for 44
    consecutive years
  • 2.7 yield
  • Return of capital to shareholders in 2004
  • Dividends of more than 450M
  • Share repurchases of almost 600M

Stock Price Appreciation Dividends Rank
1 Year (2)
3 Year (2)
5 Year (2)
2 5 4 1 3
2 4 5 1 3
1 4 3 5 2
ALLTEL BellSouth SBC Sprint Verizon
Returned More than 1 Billion of Cash to
Shareholders in 2004
Note (1) Total return based on stock price
appreciation and dividends (2) Based on the
periods ending 3/31/05 Source FactSet database
and Company reports
9
The Industry Structure Changed Significantly in
2004
  • Wireless
  • Cingular combines with ATT Wireless
  • ALLTEL will combine with Western Wireless
  • Sprint will combine with Nextel
  • Wireline/Interexchange
  • Sprint to spin-off local business
  • Verizon considering access line sale/spin
  • RLEC public offerings and high yield strategy
  • SBC and ATT
  • Verizon and MCI

Strategic activity within the industry is
accelerating and will likely continue
10
ALLTEL Western Wireless Increases Presence in
Markets Where We Add Significant Value
Pro Forma Domestic Footprint
Covered U.S. POPs 75.9M Network Coverage 1M sq.
mi. Spectrum Position Avg. 30MHZ (primarily in
850MHz band)
11
ALLTEL Western Wireless Diversifies Our
Roaming Revenue Sources
Cingular
Verizon
PRO FORMA ALLTEL
PRO FORMA ALLTEL
Cingular
Verizon
Sprint/Nextel
T-Mobile
PRO FORMA ALLTEL
PRO FORMA ALLTEL
Nextel
T- Mobile
Sprint
Note ALLTEL Pro Forma licensed coverage. All
others represent approximate network build out.
12
ALLTEL Western WirelessThe Premier Regional
Communications Company
  • This transaction
  • Is accretive to ALLTEL in first full year of
    operations (2006)
  • Combines complementary assets geographically and
    technologically
  • Increases ALLTELs wireless revenue mix to nearly
    70
  • Increases our retail position in markets where we
    add significant value
  • Creates the leading independent roaming partner
    in our markets with the top four national
    players offering multiple technologies (CDMA,
    GSM, TDMA)
  • Adds diversity and increased growth through
    International markets
  • Creates revenue upside and cost synergy
    opportunities
  • Preserves a solid balance sheet
  • Maintains flexibility for strategic options

13
2005 Major Activities
  • Changes in Capital Structure (Equity Units)
  • Integrate Cingular properties
  • Close/Integrate Western Wireless
  • Review of Strategic Alternatives in Wireline
    Business
  • Rebranding Initiative

14

15
Reconciliation of Non-GAAP Financial Measures for
the years ended December 31, 2004, 2003, 2002,
2001 and 2000
16
Reconciliation of Non-GAAP Financial Measures for
the years ended December 31, 2004, 2003, 2002,
2001 and 2000
17
Other Reconciliations of Non-GAAP Financial
Measures
18
Other Reconciliations of Non-GAAP Financial
Measures
19
Other Reconciliations of Non-GAAP Financial
Measures
20
Reconciliation of Non-GAAP Financial Measures for
the three months ended March 31
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