Qwest Net@EDU Broadband Pricing Working Group Seattle, WA June 24-25, 2003

QwestNet@EDU Broadband Pricing

Working GroupSeattle, WA

June 24-25, 2003

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“Telecom Post-Bust Strategies”

Debbie Montano

Director, Advanced Internet Initiatives

Government & Education Solutions

Qwest

debbie.montano@qwest.com

303-992-4091

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“Telecom Post-Bust Strategies”

• There has been a shift in strategy.

• Qwest is still here and going strong!

• Not post bust for everyone yet.

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Qwest at a Glance• 50,000 employees • 25 million customers • 1 million wireless customers • 551,000 DSL customers • 240 million calls transmitted across network

daily • 600 million e-mails transmitted across

network daily • Approximately 16.9 million access lines • More than 180,000 miles of fiber optic

network capacity

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Marketplace Priority Shift

THEN NOW

Top Line Growth (revenue)

Leveraged Growth

Internet at any Cost

Technology Business Model

Bottom Line Growth (earnings)

Total Cost Position

Core Focus/Simplicity

Service Business Model

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Global FootprintGlobal Footprint

Begin Re-entering LD MarketBegin Re-entering LD Market

Expand Product PortfolioExpand Product Portfolio

Improve Service LevelsImprove Service Levels

Intensify Service FocusIntensify Service Focus

Finish Re-entering LD MarketFinish Re-entering LD Market

Optimize Existing PlatformOptimize Existing Platform

Provide Complete SolutionsProvide Complete Solutions

Qwest Priority Shift

THEN NOW

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If we build it, they will come.

If we build it, they will come.

If it is profitable, we will build it.

If it is profitable, we will build it.

Qwest Priority Shift

THEN NOW

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“Ride the Light”“Ride the Light” “Spirit of Service”“Spirit of Service”

Qwest Priority Shift

THEN NOW

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Qwest Improved Financial Position• First quarter (Q1) 2003, Qwest had…

– net income: $150 million– diluted earnings per share: $0.09– revenue: $3.63 billion– operating expense (cost of sales & SG&A) decreased $233

million, or 8.1%, year-over-year.

• Strengthened the balance sheet– new $1.75 billion loan, June 2003 (at low interest rate)– reduced principle borrowings by ~$2.2 billion from debt

exchanges– expecting $7.1 billion from Qwest Dex sale (phases 1 & 2)

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Qwest Long Distance Re-entry Status

Goal: Re-entry in 14 local service states by mid-2003

* One Million Long Distance Lines – as of today!

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Qwest Long Distance Re-entry Status

• Qwest Long Distance Corp (QDLC) approved (has 271 relief) in 12 of the 14 states– QLDC does voice long distance only.– In Q1, Qwest signed up 530,000 lines/customers.– Filed in Minnesota, Mar 28, 2003 (decision June 26)– Will file in Arizona soon.

• Qwest will get “full” 271 relief once we complete restatement of prior year financials– Then 271 relief will be almost immediate in approved states. – Expected end-of-summer/early fall– Then can offer Internet at Quilt pricing in-region.

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Touch America – new developments

• Touch America – just filed for chapter 11 last week.

• Qwest announced settlement with TA this week– Will be ensuring continued operation/smooth transition– Will be acquiring some TA fiber assets (don’t know exactly

where yet).

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The Qwest Business Model

•Leadership

•Spirit of ServiceTM

•Proven Network Technology

•Comprehensive Solutions

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Leadership

• New Leadership – Dick Notebaert

• Leadership to continue to improve Qwest’s financial position

• Leadership to focus on the right things.

• Leadership to continue to navigate Qwest out of rough waters.

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The Qwest Business Model

•Leadership

•Spirit of ServiceTM

•Proven Network Technology

•Comprehensive Solutions

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Build business profitably

The Spirit of ServiceTM

Work as a team

Put Customers first

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The Qwest Business Model

•Leadership

•Spirit of ServiceTM

•Proven Network Technology

•Comprehensive Solutions

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Qwest Long-Haul and Local Network

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QWave service is not available in the states of AZ, MN, MT, NM, OR and SD until Qwest receives regulatory authorization to provide interLATA services in these states. Local loop is required and can be supplied by Qwest or a third party at an additional charge.

Qwest QWave™ Network Footprint

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The Qwest Business Model

•Leadership

•Spirit of ServiceTM

•Proven Network Technology

•Comprehensive Solutions

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Solutions

• Services! Solutions! – not technologies.

• Partner to create solution, and provide new advanced technologies, needed by customers.

• Be flexible, creative, open, efficient

• Work together

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Solutions

• WAN Strategy– Solutions, not technology…

• GigE – Internet & Access– OnFiber; Metro Optical Ethernet– LAN Switching Service; GeoMAX

• Next Gen Optics – ideas to lower costs…– Ultra Long Haul– Optical Switching– Tuneable Optics…

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The Qwest Business Model

Leadership Co

mp

rehen

sive

So

lutio

ns

Spirit of ServiceTM

Proven Network Technology

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Thank you