[Qwest LOGO]
ride the light [sm]
Qwest
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[Qwest LOGO]
This presentation contains forward-looking statements that involve risks and
uncertainties. These statements may differ materially from actual future events
or results. Readers are referred to the documents filed by Qwest with the SEC,
which identify important risk factors that could cause actual results to differ
from those contained in the forward-looking statements.
These materials include analysts' estimates and other information prepared by
third parties for which Qwest assumes no responsibility. In addition, certain
statements regarding synergies and other projections and information contained
in this presentation are based on publicly available information regarding U S
West and Frontier. Qwest undertakes no obligation to review or confirm analysts'
expectations or estimates or such publicly available information or to release
publicly any revisions to any forward-looking statements to reflect events or
circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
The Qwest logo is a registered trademark of Qwest Communications International
Inc. in the U.S. and certain other countries.
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[Qwest LOGO]
Joseph P. Nacchio
Chairman
and
Chief Executive Officer
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[Qwest LOGO] We are announcing
[U S WEST Logo] o A superior offer to U S WEST shareholders for a merger
with Qwest
[Frontier o A superior offer to Frontier shareholders for a merger
Logo] with Qwest
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[Qwest LOGO] The Announcement
[Qwest LOGO]
[U S WEST Logo]
[Frontier Logo]
Creating an $87 Billion Worldwide Communications Powerhouse
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[Qwest LOGO] Why Combine These Companies?
o Expands and accelerates the Qwest growth strategy -- worldwide deployment
of broadband Internet services by adding more:
-- Scale economies - size matters
-- Worldwide fiber backbone - fortify position
-- Broadband local access - direct access to customers
-- IP / Value-added data services - multimedia and ASP
-- Distribution and customers - reach more markets
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[Qwest LOGO] A Bigger and Stronger Company
Stand Alone Combined
----------- --------
2000 Estimates
- Revenue $4.65B $22B
- EBITDA $1.1B $8B
o Customers 4M 31M
o Employees 8,500 71,000
o Market Cap $36B $87B
(6/11/99)
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[Qwest LOGO] An Even Larger Network Presence
Stand Alone Combined
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o U.S. Route Miles 18.8K 79.2K
o U.S. Fiber Miles 900K 2.9M
o U.S. MSAs On-net 150 175
o Europe Route Miles 2.1K 2.1K
o Europe Fiber Miles 100K 100K
o Trans-Oceanic 67 Gbps 67 Gbps
o Global Fiber Miles 1.3M 3.35M
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[Qwest LOGO] Expands Broadband Local Access
Stand Alone Combined
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o Total Markets Covered 40 75
o Metro Fiber Rings 19 35
o Access Lines - 17M
o DSL Lines - 35,000
o DSL Markets 31 45
o Fixed Wireless Markets 40 40
o PCS Customers - 220,000
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[Qwest LOGO] Expands Service Line
Stand Alone Combined
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o Hosting Centers 7 23
o OC-48 IP Miles 50,000 110,000
o Data/IP Solutions QIMM QIMM
GlobalCenter
!nterprise
o IP Employees 550 2,100
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[Qwest LOGO] Strong Regional Presence
[MAP OF US LISTING LARGE CORPORATIONS THAT HAVE HEADQUARTERS IN U S WEST
AREAS AND PRINCIPAL FRONTIER SERVICE AREA]
Microsoft, Boeing, Costco, Safeco, Weyerhaeuser, Nordstrom,
Airborne Freight, Nike, Pacificorp, American Stores, Miicroage, Phelps Dodge,
ConAgra, IBP, Berkshire Hathaway, Mutual of Omaha, Sun Healthcare, Dayton
Hudson, United Healthcare, Northwest Airlines, General Mills, Best Buy, 3M,
Maytag, Principal Financial, KN Energy, Ball Corp, Corporate Express, Bausch &
Lomb, Cabletron, Kodak, Xerox
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[Qwest LOGO] Robust U.S. Broadband Presence
[MAP OF US HIGHLIGHTING U S WEST AND BELLSOUTH SERVICE AREAS AND ILLUSTRATING
THE LOCATIONS THROUGHOUT THE US WHERE THE COMBINED COMPANY WOULD HAVE BROADBAND
PRESENCE DIRECTLY OR THROUGH AFFILIATES]
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[Qwest LOGO] An Expanding Global Multimedia Network
[MAP OF US, MEXICO, JAPAN AND EUROPE AND ATLANTIC AND PACIFIC OCEANS
ILLUSTRATING INTERNATIONAL FIBER NETWORK OF THE COMBINED COMPANY]
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[Qwest LOGO] Superior Terms to Other Offers
o Higher premiums
o Stronger currency with substantial company assets and management team support
o More value from greater realizable synergies
o Simple transaction structures
o Clear leadership
o Integration experience -- higher probability of success
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[Qwest LOGO] U S WEST Proposal
With Frontier Without Frontier
Terms 1.783 Qwest Shares 1.738 Qwest Shares
As of June 11
Value $80 $78
Premium to U S WEST price 46% 42%
Premium to Other Offer 25% 22%
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[Qwest LOGO] Frontier Proposal
With U S WEST Without U S WEST
Terms 1.226 Qwest Shares 1.181 Qwest Shares
+ $20 Cash + $20 Cash
As of June 11
Value $75 $73
Premium to Frontier price 35% 32%
Premium to Other Offer 19% 16%
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[Qwest LOGO] Merger Process
o Offers not conditioned upon each other
o Conditions to Closing
- Shareowner approval
- Regulatory approval
o Closing
- Same timing as other offer
- Close Frontier by year end 1999
- Close U S WEST by mid 2000
o Integration/synergy ramp up period 2H00-2001
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[Qwest LOGO]
Robert S. Woodruff
Executive Vice President
and
Chief Financial Officer
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[Qwest LOGO]
New Large Cap Growth Company
o $87B market capitalization
o Pro forma revenue goes to $22B
- Post 271 growth of 15-17%
o Pro forma EDITDA goes to $8B
- Post 271 growth of 20%+
o EPS accretive first year after close
o Growth in shareholder value
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[Qwest LOGO])
Large Cap Growth Company
Market Cap Revenue Growth
---------- ------- ------
Qwest Combined $87B $22B 15-18%
General Electric $330B $101B 14%
Wal-Mart $190B $142B 17%
MCIWorldcom $165B $30B 17%
Merck $160B $28B 14%
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[Qwest LOGO]
Combined Pro Forma Revenue
by Service Type
[ ] Data/Internet [ ] Local Voice
[ ] Long Distance [ ] PCS [ ] Other
2000E 2005E
[GRAPHIC OMITTED] [GRAPHIC OMITTED]
(Pie chart showing 18% Data/Internet, (Pie chart showing 46% Data/Internet,
1% PCS, 9% Other, 25% Long Distance, 3% PCS, 3% Other, 22% Long Distance,
47% Local Voice) 26% Local Voice)
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[Qwest LOGO] Synergies
o Significant - $14B through 2005
o Real - specifically identified
o Attainable - proven experience in delivering
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[Qwest LOGO] Synergy Summary - Combined
2002 5 Year Total
Revenue (EBITDA Impact) $200-300 $2,900-3,100
Network/Operations $350-450 $2,200-2,400
SG&A $550-750 $4,500-4,700
Capital $700-800 $3,800-4,000
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Total $1,800-2,300 $13,400-14,200
($millions)
o Synergy ramp to full year impact in 2002
o Real synergies based on identified cost,
capital savings, and revenue enhancement
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[Qwest LOGO] Synergy Summary - U S WEST
2002 5 Year Total
Revenue (EBITDA Impact) $200-250 $2,600-2,750
Network/Operations $250-300 $1,600-1,700
SG&A $400-550 $2,900-3,000
Capital $400-450 $2,200-2,300
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Total $1,250-1,550 $9,300-9,750
($millions)
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[Qwest LOGO] Synergy Summary - Frontier
2002 5 Year Total
Revenue (EBITDA Impact) $0-50 $300-350
Network/Operations $100-150 $600-700
SG&A $150-200 $1,600-1,700
Capital $300-350 $1,600-1,700
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Total $550-750 $4,100-4,450
($millions)
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[Qwest LOGO] Synergy Components
o Revenue
- Local revenue enhancement
- Aggressive data expansion
- IP and value-added services
- Long distance
o Network Cost
- Network operations and maintenance
- Access and transport
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[Qwest LOGO] Synergy Components
o SG&A
- Billing and customer support solutions
- Back office support consolidation
- Distribution channel effectiveness
- Procurement efficiencies
o Capital
- Duplicative network buildout
- Infrastructure and back office duplication
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[Qwest LOGO]
The Right Transactions
by the Right Team
for the Right Reasons
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[Qwest LOGO] In Summary: It's About Growth
o Growth in Scale
o Growth in Scope
o Growth in Revenue
o Growth in EBITDA
o Growth in Opportunity
o GROWTH IN SHAREHOLDER VALUE
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[Qwest LOGO]
ride the light
[logo](SM)
Qwest(R)