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BUSINESS OVERVIEWBUSINESS OVERVIEWBUSINESS OVERVIEW

September 19, 2006September 19, 2006

MTS ALLSTREAMMTS ALLSTREAMMTS ALLSTREAM

2005 revenues = $2 billion

3rd largest national provider in Canada

#2 in most Canadian business markets

>>>> MTS Allstream OverviewMTS Allstream Overview

Clear leader in Manitoba

Market-leading business and residential products

Quality asset base

High levels of customer satisfaction

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$262.5 $265.1

2004 2005 2006 Projected

Strong Free Cash Flow*Strong Free Cash Flow*>>>>

* From continuing operations.** Pro forma.

$285 - $310

**

mill

ions

Market OverviewMarket Overview

IP changing the landscapenew products/servicesnew demands

Highly competitive marketplace

MTS Allstream well positioned to succeed

market innovator

focused approach

highly competitive cost structure

leading-edge IP-based network

Enterprise and Consumer MarketsEnterprise and Consumer Markets

>>>>

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InnovationInnovation

Recent innovations at MTS Allstream:IP trunkingAllstream Collaboration Suitenetwork resident IP Telephony1x-EVDOwireline telco HDTVe-mail on TV/TV Call Display

Driving innovative solutions to customers while controlling costs is key to successDriving innovative solutions to customers while controlling costs is key to success

>>>>

Strong customer base and relationshipsStrong customer base and relationships

More than 6,000 enterprise customers

Excellent relationships with business and residential customers

>>>>

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MTS Allstream is a strong proponent of pro-competitive regulation and policy

We are the leading national competitive provider

Competition drives the pace and extent of innovation in telecom market

Rapid development and deployment of creative telecommunications services and solutions for the business sector key driver of investment, ICT adoption and productivity growth

>>>> Regulatory PerspectiveRegulatory Perspective

Bell Canada

Telus

61%

23%

National Business Market NAS Share*

Other Providers16%

* Data based on Q4 2005 public disclosure.

The incumbents’share of the business market was 86% at the end of 2005 unchanged from 2004

Bell’s share of the business market had not dropped below 78% in any major urban centre

>>>> The Canadian Telecom LandscapeThe Canadian Telecom Landscape

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Key to recognize two market realities:Residential: Cablecos and telcos compete on separate incumbent networksBusiness: Competitors compete with telcos on one telco-controlled network

Fair wholesale access for competitors to telco-controlled network fundamental to ensuring sustainable competition, investment and innovation

>>>> Regulatory PerspectiveRegulatory Perspective

We have commented on government’s proposed Policy Direction:

support drive to rely on competitive market forceswholesale competitor access key to competitionduplication of existing network not feasible or useful

We have submitted expert analysis of UK/US approaches:

demonstrate need for retail-de-regulation to parallel wholesale access

Government and regulator have been receptive to comment

MTS Allstream position similar to other competitive providers

>>>> Telecom Policy ReviewTelecom Policy Review

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Complete business review to create long-term shareholder value

Strategic PrioritiesStrategic Priorities

Continue leading in Manitoba

Expand the national business

Achieve $100 million in cost reductions and productivity

>>>>

Lowering costs to reflect:competitive landscapetechnology evolution

2005 program reduced annualized costs by $48 million

Current cost reduction program$75 million to $100 million new realized savings in 2006

>>>> Aligning the Cost StructureAligning the Cost Structure

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Focusing the BusinessFocusing the Business>>>>

Strengthening fundamental businessaligning product and market focusaligning cost structure

Assessing core/non-core assetscommercial real estatesale of Directories business

$281 million (12x EBITDA*)

* Earnings before interest, taxes, amortization and other income (expense).

Looking AheadLooking Ahead>>>>

Increase focus in business markets served with on-net facilities

Leverage Consumer Markets division small business strengths nationally

Continue to expand network capabilities in Manitoba where opportunities exist

Increase focus on converging applications in consumer markets

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SummarySummary

Innovative CompetitorInnovative Competitor

Leading Edge Asset BaseLeading Edge Asset Base

Succeeding in a Challenging MarketSucceeding in a Challenging Market

>>>>

Reducing Cost StructureReducing Cost Structure

Financially StrongFinancially Strong

Enterprise Solutions divisionEnterprise Solutions division

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AgendaAgenda

Enterprise Solutions roadmapEnterprise Solutions roadmap

Strategic focus areasConverged IPUnified CommunicationsProfessional Services

Strategic focus areasConverged IPUnified CommunicationsProfessional Services

Growth and profitabilityGrowth and profitability

>>>>

Overview of Enterprise Solutions divisionOverview of Enterprise Solutions division

Extensive National NetworkExtensive National Network

FIBRE ROUTE & MANITOBA NETWORKFIBRE ROUTE & MANITOBA NETWORK

DIGITAL RADIODIGITAL RADIO

NETWORK ACCESS POINTNETWORK ACCESS POINT

U.S. NETWORK ACCESS POINTU.S. NETWORK ACCESS POINT

SeattleSeattle

SpokaneSpokane WinnipegWinnipeg

ChicagoChicagoDetroitDetroit

BuffaloBuffalo

New YorkNew York

ChamplainChamplain

VancouverVancouver

VictoriaVictoriaRichmondRichmond

EdmontonEdmonton

CalgaryCalgary

KamloopsKamloops

BurnabyBurnaby

Thunder BayThunder Bay

SaskatoonSaskatoon

ReginaRegina

LondonLondon

SudburySudbury

HamiltonHamilton TorontoToronto

QuebecQuebec

HullHullOttawaOttawa

HalifaxHalifax

St. John’sSt. John’s

MontrealMontreal

Fort McMurrayFort McMurray

>>>>

14,000+ route km inter-city fibre8 toll switches50 offices across Canadanational sales force

7 cross border connections800+ data switches 23,000+ high-speed data ports7.5 Bn+ minutes carried annually

NATIONAL COVERAGENATIONAL COVERAGE GLOBAL REACHGLOBAL REACH

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More than 6,000 Enterprise CustomersMore than 6,000 Enterprise Customers>>>>

GovernmentFinancial Services Manufacturing Retail

Service Strategy RoadmapService Strategy Roadmap

Network – IPCEthernet, Internet, IP-VPN, DWDM

Network Services and Securitymulticasting, high availability networks,

customized reporting, network resident security

Voice ApplicationsIP trunking, NRIPT (cable companies), enhanced call

manager application COS, managed services, enhanced messaging

CollaborationSecurity, Microsoft Exchange (e-mail, etc.), video conferencing,

document collaboration, instant messaging

IP Content Applicationsmany-to-many content distribution,

streaming media

Service Managem

entend-to-end service

Port

al a

nd S

elf-

Serv

ice

trou

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tick

etin

g bi

lling

and

bill

rev

iew

orde

r pl

acem

ent

band

wid

th m

anag

emen

t

>>>>

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Focus connectivity product development on DSL/Ethernet and IP services

ConvergedIP

OPTIMIZE LEGACY CORE

UnifiedCommunications

Build a complete suite of VoIP, IP communication and Collaboration services

Professional Services

and Security

Focusing on security consultation and managed security services

Strategic Focus AreasStrategic Focus Areas>>>>

Collaboration ManagementSecurityEnterprise Applications

Converged IP Networks

Professional Services

Optimize the Core

UnifiedCommunications

Strategic Focus AreasStrategic Focus Areas>>>>

Ethernet (TLS)MPLSInternetEthernet and Storage Private LineMNS – Network ManagementMNS Professional Services

Enterprise IP TelephonyVoIP – WholesaleVoIP – Retail & IP TrunkingAllstream Collaboration Suite

Business LinesToll-FreeOutbound LDPrivate LineTransit LDATMDial-up InternetHosting

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Converged IP ProgramConverged IP Program

All traffic moving to IP

Leader in IP marketfirst national MPLS network in 2000significant deployments (Scotiabank, Great-West Life, WestJet, Hydro One)

Evolutionary path for customers

>>>>

135144

126

Q4/05 Q1/06 Q2/06

Customer BaseCustomer Base

IP-VPNIP-VPN>>>>

Next-Gen Data Connectivity Revenues 57%*Next-Gen Data Connectivity Revenues 57%** Revenue growth of first six months of 2006 compared to first six months of 2005.

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Business IP (MPLS) Network at WestJetBusiness IP (MPLS) Network at WestJet

Canada’s second largest airline

Extension of preferred supplier agreement

North American MPLS network solution

Value-added servicesconverged IP network

bundled security and professional solutions

>>>>

Business IP (MPLS) Network at Scotia BankBusiness IP (MPLS) Network at Scotia Bank

One of Canada’s largest financial institutions

1,001 branch locations across Canada

Stringent, high availability service level agreement

>>>>

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Unified Communications ProgramUnified Communications Program>>>>

Unique set of retail and wholesale offers

National service delivery and maintenance

11 delivery centres across Canada

Leading equipment partnersCisco, Nortel and Mitel

Mitel IP Telephony in the Education VerticalMitel IP Telephony in the Education Vertical

Rocky View School Division40 elementary and secondary schools in greater CalgaryTeleworker Extension for remote employeesMobile Extension for IT Department

London District Catholic School Board50 elementary and 8 secondary schools serving 23,000 studentsintegrates VoIP and Unified Messaging enabled network consolidation, reduced local lines and lowered MAC fees

BC Teachers FederationIP PBX supporting 230 IP and analogue phonesAllstream-supplied connectivity converges voice, video-conferencing and data trafficcuts local service costs while increasing productivity and security

>>>>

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Calgary-based sour gas processing subsidiary of SemGroup

capacity of 1.5 billion cubic feet of gas per day

Cisco IP Telephony solutionCallManager and 160 handsetsexisting MTS Allstream LD customer

Company wanted a PBX-based environment

reduced local access requirements

Cisco IP Telephony at SemCamsCisco IP Telephony at SemCams>>>>

Before IP Trunking SolutionBefore IP Trunking Solution After IP Trunking SolutionAfter IP Trunking Solution

IP Trunking ServiceIP Trunking Service

Reduces costsAccelerates return on investmentImproves productivityEnhances business flexibility

>>>>

First Canadian service providerFirst Canadian service provider

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Wholesale TelephonyWholesale Telephony>>>>

Stay tuned!

Professional Services ProgramProfessional Services Program

Collaboration Management

Security and Identity Management

Enterprise Applications

>>>>

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Microsoft PartnershipMicrosoft Partnership

Connected Services Framework Partner

Gold-Certified Advanced Infrastructure Solutions CompetencyBusiness Process and Integration Solutions CompetencyInformation Worker Solutions Competency

1.8%4.3% 3.2%

16.7%14.9%

18.5%

4.0%

20.0%

Q3/05 Q4/05 Q1/06 Q2/06

TELUS MTS Allstream

Focus on ProfitabilityFocus on Profitability>>>>

CLEC Division EBITDA* Margin ComparisonCLEC Division EBITDA* Margin Comparison

* As reported by MTS Allstream and TELUS.

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SummarySummary

Advanced National IP NetworkAdvanced National IP Network

Innovative Products and ServicesInnovative Products and Services

#2 in Every Major Market#2 in Every Major Market

>>>>

Significant Market OpportunitySignificant Market Opportunity

Talented PeopleTalented People

StrengthsStrengths

Consumer Markets divisionConsumer Markets division

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AgendaAgenda

Overview of Consumer Markets divisionOverview of Consumer Markets division

Driving growth and innovationDriving growth and innovation

Winning the broadband homeWinning the broadband home

>>>>

SummarySummary

>>>> Full-Service ProviderFull-Service Provider

Residential and business wirelineLocalLong distanceData

All-digital cellular1xEV-DO

High-speed Internet

Digital television

Commercial and residential security services

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$826.8 $836.8 $858.1 $902.1$808.9

2001 2002 2003 2004 2005

RevenuesRevenues

Overview of Consumer Markets divisionOverview of Consumer Markets division>>>>m

illio

ns

Managing transition from legacy to growth services

Overview of Consumer Markets divisionOverview of Consumer Markets division>>>>

One of the most profitable ILECs in North AmericaEBITDA* margin +50%

Long-term focus on cost disciplineone of lowest opex costs per line

Continued focus on cost reduction and efficiency going forward to address market realities

Driving growth in wireless, high-speed Internet and digital television in Manitoba market

Developing new initiatives to grow small business market nationally

* Earnings before interest, taxes, amortization and other income (expense).

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WIRELINEWIRELINE

WIRELESSWIRELESS

HIGH-SPEED INTERNETHIGH-SPEED INTERNET

DIGITAL TELEVISIONDIGITAL TELEVISION

Pervasive Network InfrastructurePervasive Network Infrastructure>>>>

673,500 access lines in service*

Digital 1X CDMA network provides coverage to 97% of Manitoba’s populationNew EV-DO network available in Winnipeg and Brandon332,400 customers in service*

ADSL/VDSL network provides coverage to 85% of Manitoba’s population, in over 150 communities including remote sites such as Churchill135,000 customers in service*

VDSL network provides coverage to 93% of Winnipeg households56,500 customers in service*

NUNAVUTNUNAVUT

ONTA

RIO

ONTA

RIO

SASK

ATC

HEW

AN

SASK

ATC

HEW

AN

Hudson Bay

Hudson Bay

M A N I T O BAM A N I T O BA

* As at June 30, 2006.

Market leader

Strong ARPU $55*

Industry low churn 0.9%**

Digital CDMA 1X network covers 97% of Manitoba’s population – broadest available

First to launch 1xEV-DO in Manitoba

Driving Growth and InnovationDriving Growth and Innovation>>>>

Wireless businessWireless business

* Average monthly revenue per customer for the six months ended June 30, 2006.** Postpaid churn rate for the six months ended June 30, 2006.

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High-speed Internet available to over 85% of the province’s population

Innovating with market leading applications and offers

basic service 5.0 Mbpswireless home networkingZoneAlarm Security Suite

Access to more than 300 Wi-Fi hotspots across Canada including 45 sites in Manitoba

Driving Growth and InnovationDriving Growth and Innovation>>>>

Internet businessInternet business

Driving Growth and InnovationDriving Growth and Innovation>>>>

MTS TV - industry leading digital televisionMTS TV - industry leading digital television3 simultaneous digital streams

Superior choice in channel package selectionover 200 channels with over 25 theme groups

individual channel selections

Wide selection of Video on Demand movies

Exclusive MTS TV featuresTV E-mailTV Call DisplayAuto-tuneInteractive TV Portal

Coming soonDigital photo-sharePay per View Live EventsTV Channel Package changes over Web

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Introduced in Q3 2006One of the first in Canadian wireline telecommunications with HDTVTechnology

VDSLHD set-top box

Offer:initial launch 7 channels (expanding in 2007)$349 for set-top box plus installation fee$4.99 per month charge (waived on 2-year agreement)disciplined competitive approach vs. deep discounting

Driving Growth and InnovationDriving Growth and Innovation>>>>

High Definition televisionHigh Definition television

SOHO and small business with less than 100 employeesCanadian telecom spend of $9 billion

Existing MTS Allstream national base of approximately 80,000 small business customers

planning targeted price increasesimprove overall margins by grooming current customer base

Grow ARPU for existing customers and acquire new customers through packaged, integrated offers

targeted to specific local markets where existing network footprint enables profitable growth

Developing IP-based products optimized for small business

Small Business marketSmall Business market

Driving Growth and InnovationDriving Growth and Innovation>>>>

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Capitalizing on Newest Product AreasCapitalizing on Newest Product Areas

20052005

112.0%

14.2%

Digital Television Revenues

Wireless Revenues

Growth

11.1%Wireless Customers

58.3%Digital Television Customers

23.0%High-speed Internet Revenues

>>>>

YTD*YTD*

47.5%

36.8%

13.1%

11.6%

17.9%

* June 30, 2006.

21.5%High-speed Internet Customers 18.2%

$209.2 $203.9 $200.7 $202.7$170

$257.2

2001 2002 2003 2004 2005 2006 (F)

Competitive EnvironmentCompetitive Environment>>>>

mill

ions

Anticipated changing technology and competitive environmentMajor $300 million broadband investment beginning in 2000Well positioned to compete with cable companyContinuing to invest to strengthen our business

footprint upgrades for wireless, high-speed Internet, digital televisionnew service development (eg. Press2Talk, e-mail on television)Valley Cable Vision: 3,700 cable customers

Capital ExpendituresCapital Expenditures

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Winning the Broadband HomeWinning the Broadband Home>>>>

Full-Service Provider - Quintuple playWireline voiceWirelessHigh-speed InternetDigital televisionCommercial and residential security services

Converged serviceswireless and wireline

Simultaneous ringShared mailbox

high-speed Internet and digital televisionread e-mail on televisiondigital photo-share

Local provider strongly focused on serving Manitobastrong brand and customer relationshipbroadest network coverage and capabilitystrong sales and service capabilities

MTS competitive differentiatorsMTS competitive differentiators

Bundling StrategyBundling Strategy>>>>Grow our base of multiple-service customers by upselling existing customers

Leverage our position as the only full-service telecom provider and differentiate through unique value propositions

Entangle customers with bundles and long-term promotional offers

Winback customers with full-service offers

Maintain our premium price position in the Manitoba market

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Bundling ResultsBundling Results>>>>

Bundled customers doubled in last 12 months

Bundling benefitsUpselling wireless, high-speed Internet, digital television, and home security

70% of digital television customers take high-speed InternetCustomer loyalty

lower churn, greater share of wallet

Cost efficienciessingle bill/electronic billsingle truck rollintegrating all services provide efficiencies: marketing, sales and service

SummarySummary

Communications InnovatorCommunications Innovator

Strong Brand RecognitionStrong Brand Recognition

Receptive Customer BaseReceptive Customer Base

>>>>

Leading Market PositionLeading Market Position

Excellent Operating EfficiencyExcellent Operating Efficiency

StrengthsStrengths