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Green Report2004

Company ProfileMTS is Canada’s third-largest national communications provider, with 6,600 dedicated employees focused on delivering outstanding value to its customers. Seamlessly blending innovative solutions and world-class technology, MTS connects its customers to the world.

MTS (Manitoba) division (the “Manitoba division”) is the primary telecommunications provider throughout Manitoba, the clear leader in our market. The Manitoba division serves residential and business customers across the province offering a full suite of wireline voice, high-speed Internet and data, next generation wireless, directory, digital television, and security and alarm monitoring services.

The Allstream (National) division (the “National division”) is a customer focused, agile innovator that offers a world class portfolio of business solutions, including data and voice connectivity, infrastructure management and information technology (“IT”) services to business and wholesale customers. Allstream has built a strong market share position that spans the country, and includes many of Canada’s largest companies as well as federal, provincial and municipal governments.

MTS has an extensive national broadband fibre optic network spanning more than 24,300 kilometres, and provides international connections through strategic partnerships and interconnection agreements with other international service providers. MTS’s common shares are listed on The Toronto Stock Exchange (trading symbol: MBT). MTS’s website is located at www.mts.ca.

A report on MTS’s Environmental Commitment,

Performance, Initiatives and Programs.

This report focuses on MTS operations in Manitoba for 2004.

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1. Company profile 3. Introduction 4. Environmental Policy 5. MTS Environmental Management System 6. Environmental Performance 7. Report on 2004 Enviromental Initiatives 9. Report on Environmental Programs 14. MTS Volunteers (Pioneers) 15. Initiatives For 2005 Looking Forward

Table of Contents

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MTS is committed to conducting its business in a manner which reflects concern for the environment and supports the principles of sustainable development.

The foundation for MTS’s commitment to the environment is its Environmental Management System (EMS). With this foundation, the company and its employees bring life to MTS’s environment policy, programs and initiatives. This includes:

• Ensuring compliance with environmental law and regulations.

• Communicating with and providing education for employees.

• Minimizing waste and maximizing the principles of reduce, re-use and recycle.

• Being prepared for emergency situations.

• Using environmentally friendly substances.

• Applying business practices that preserve the environment.

• Undertaking regular environmental reviews to ensure that the EMS is appropriately applied and updated as necessary.

MTS’s EMS is a living document which is updated as regulations change and as more environmentally friendly ways of doing business are developed. This approach has served MTS and Manitoba’s environment well over the years, including:

• Receiving recognition from the Federal Minister of Natural Resources for participation in the Office of Energy Efficiency’s Energy Innovators Initiative to help reduce greenhouse gas emissions.

• Being ranked by the Corporate Knights as Canada’s most responsible company in the telecommunications sector.

• Being ranked by the Corporate Knights as one of the top 50 Best Corporate Citizens in Canada.

Always looking for opportunities to improve, work is underway in 2005 to establish a single EMS to cover the combined MTS/Allstream operations.

This Green Report describes environmental programs, initiatives and performance for MTS in Manitoba.

Introduction

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Environmental Policy

Procedures & Guidelines• To develop and implement procedures and guidelines which will give effect to the Environmental Policy.• To comply with applicable laws and regulations regarding the environment and sustainable development.

Communication and Education• To encourage and foster environmentally sensitive attitudes, knowledge and skills of employees through communication, education and community involvement.

• To provide an annual report to the Executive and to the Board of Directors on environmental matters affecting MTS.

• To provide reports to the Executive and to the Board of Directors on environmental matters affecting MTS, whenever the Board has to make decisions.

Waste Management• To set objectives and seek out measures within all operational groups which demonstrate commitment to sound environmental practices, which minimize the creation of waste and which maximize the principles of reduce, re-use and recycle within MTS. • To dispose of waste in an environmentally sound manner.

Chemical Control and Emergency Procedures• To identify and inventory substances used in MTS and substitute, wherever practical and reasonable, environmentally friendly substances.• To develop and monitor environmental emergency procedures and train appropriate staff for emergency situations.

Environmental Initiatives• To encourage innovative technology, products and services that contribute to preservation of the environment or minimize negative environmental impact.

Environmental Audits• To monitor procedures for compliance with applicable environmental laws and regulations.

Policy Statement

Goals

MTS is committed to conducting its business in a manner, which reflects concern for the environment and supports the principles of sustainable development.

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Environmental Management is an established part of MTS’s overall approach to management, providing the framework to balance and integrate the economic interests of the organization with the requirements of environmental protection. MTS’s Environmental Management System (“EMS”) reflects the vital importance that MTS places on the protection of the environment and conservation of natural resources. The objectives of MTS’s EMS are formulated based on international standards for environmental management systems as articulated by the International Standards Organization (“ISO”) and the Canadian Standards Association (“CSA”).

Elements of the MTS EMS

MTS’s EMS begins with the MTS Environmental Policy. It employs the elements of planning, implementation, checking/correcting and management review which may in turn result in changes to the Environmental Policy. The elements flow as follows....

As part of the “Management Review” element, the following reports were provided to MTS’s Executive Committee, Audit Committee, and/or Board of Directors in 2004:

• The Annual Environment Review Report, which addresses MTS’s compliance with environmental law.• The Annual Green Report, which covers MTS’s environmental commitment, performance and programs. • Quarterly environmental reports, which identify accomplishments, incidents and initiatives.

MTS Environmental Management System

Environmental Policy

Planning

ImplementationCheck & Correction

Management Review

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2004 Environmental Review

Consistent with its commitment to the environment and principles of sustainable development, MTS conducts an annual review to assess compliance with environmental laws, regulations, licenses approvals, registrations and MTS’s internal Environmental Management System (EMS).

In 2004, the annual review focused on compliance for the following sites in Manitoba.1. Thompson District Operations2. Thompson district sites accessible by road3. South and Central District Operations4. Small to medium fuel storage tanks

The Environmental Review identified the following opportunities for improvements in Manitoba.

1. MTS will update the environmental procedure for inspecting small and medium fuel storage tanks. The updated procedures will reflect the regulatory changes to the Manitoba Conservation fuel storage regulation.

2. The Environmental Review Team is to prepare a risk assessment tool for Property Services and Network Services. The tool can be used to quantify the environmental risk of fuel storage sites as well as priorize tank upgrades, ensure appropriate size of tanks and identify high risk environment sites. Implementing upgrades to fuel tank systems or devices to reduce the impact of spills are proactive measures and address due diligence.

3. The diesel generator rooms in the Thompson District Office and Portage District Office will be diked and the floors sealed to be compliant with the Manitoba Fire Code.

4. The fuel from the storage tank at the recently decommissioned radio site at Treherne will be removed and Manitoba Conservation will be advised accordingly.

Spills & Incidents In 2004, MTS experienced three reportable releases which were communicated to Manitoba Conservation:

• One Halon release. • One Freon release. • One hydrocarbons spill with remediation completed with Manitoba Conservation direction.

In response to the spill, MTS implemented a program to upgrade small to medium standby generator tanks with solenoid shutoff valves. In 2005, 10 fuel tanks will be fitted with the valve. The valve will only activate if the generator is operating. As a result, spills created by supply line breaks will be eliminated.

Enviromental Performance

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Office Lighting Upgrades in Winnipeg

In 2004, MTS completed replacement of the office light fixtures for five floors at 191 Pioneer Ave. In total, over 1000 T12 fluorescent lights were replaced with T8 high efficiency electronic fluorescent lights. The T8 electronic fluorescent lights are reported to be 25% to 30% more efficient than T12’s. MTS will continue upgrading 191 Pioneer Ave. and 333 Main St. in 2005.

Driving Efficiency Initiative

Since fuel efficiency tracking began in 2000, there has been a net improvement of 14.6%. MTS continued to promote fuel-efficient driving habits and the MTS idling policy to operations staff in 2004.

Building Upgrades in Manitoba

Responsible management of the MTS premises lowers costs, saves energy and reduces impact on the environment. 2004 building upgrades include the following:

• The CFC 11 chiller system at 191 Pioneer Ave. was replaced with a HCFC 134A chiller, reducing an Ozone-depleting chemical.

• The Halon fire suppressions systems were removed from 640 Corydon Ave. Sixteen cylinders of 1301 Halon fire suppression gas were removed from three telecommunication rooms. The Halon gas was replaced with an early detection water sprinkler system. All Halon fire suppression equipment has now been removed from this site.

• The Halon fire suppression system at Steeprock Radio was removed and replaced with the Ozone friendly FM200 fire suppression gas.

• Warehouse operations at 1300 Ellice Ave. was moved to a new, more efficient building at McGillivray Park. The building upgrade eliminated an aging gas-powered boiler system an energy inefficient building. The new warehouse complex is a combination electric/natural gas system. The new building was constructed with efficient R-Value building envelope and energy saving construction techniques.

• Hughes Lake Radio was decommissioned and replaced with a new radio building at Black Sturgeon. Replacing the Hughes Lake site eliminated a diesel generator and fuel storage tank.

Report on 2004 Enviromental Initiatives

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Report on 2004 Enviromental Initiatives (continued)

Environmental Awareness Training

Starting in 2004, MTS initiated environment awareness training for all field operations employees. Environmental awareness training is now a required training module for all field operations employees. This awareness training compliments the specific spill response and emergency reporting training already in place.

Allstream Operations

In 2004, MTS acquired Allstream and shortly thereafter, MTS initiated actions to implement a common environmental management system which meets the needs of the combined organization.

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Office Paper Recycling Program

MTS’s paper recycling program collects all clean paper products including newspaper, magazines, envelopes, office paper and cardboard.

• In 2004, MTS recycled 80.25 metric tonnes of paper products.

Shredding Program

In 2004, MTS entered into an agreement for on-site versus off-site shredding which provides a substantially greater level of security and reduces internal costs while continuing to support the environment. For every metric tonne of shredded paper, 17 trees are saved. Based on our current volume, MTS will save 2,890 trees each year.

MTS Media Business Directory Recycling Program

MTS Media Services operates a directory recycling program for collecting directories not supported by the Blue Box Program.

• In 2004, MTS recycled 411 metric tonnes of directories.

Report on Environmental Programs: Recycle

Paper Recycling Program Quan/04(metric tonnes)

Office paper recycling program 80.25 Shredding Program 154

Business directories recycled 411

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Report on Environmental Programs: Recycle (continued)

Automotive Services RecyclingAutomotive Services operates a comprehensive recycling program to collect and recycle materials generated from automobile and diesel engine service.

Material Quan/04

Tires 360

Batteries 124

Oil (litres) 7800

Crushed Filters (drums) 3.0

Plastics (Kg) 242

Antifreeze (litres) 1230

Investment Recovery Recycling Program

Investment Recovery is a collection point for equipment and material taken out of service. The materials generated are collected for the metal value and recycled.

Quan/04 (Kg)Material

Lead acid batteries 61580 Aluminum 821 Steel 116900 Other metals 156800 Pic cable 3239 Wire 4772 Cellular telephones and accessories 300

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Report on Environmental Programs: Reduce

Energy Reduction

In 2004, Property Services implemented energy conserving practices to reduce energy consumption and building operating costs:

• Window upgrades were made at the offices at Alpine and The Pas.

• An Equipment Environmental Control system for 20 sites started in 2004 and will continue into 2005. The project is to eliminate the unnecessary air conditioning use caused by heat generated by communication equipment in small spaces.

The balanced system will provide an integrated system of venting and air conditioning.

EcoPassIn 2002, MTS started to participate in Winnipeg Transit’s EcoPass, a project intended to reduce auto emissions by encouraging transit ridership through employer-subsidized monthly adult bus passes. Employees receive a 30% reduction on the cost of adult monthly passes, with MTS contributing 20% and Winnipeg Transit contributing the balance.

• For 2003 and 2004, MTS employees purchased 7,800 monthly bus passes.

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Reduce the RiskSite ImprovementsSite improvements in the North continued in 2004 under the Service Improvement Program (SIP).

• The prime diesel generating sites at Leftrook Lake and Suwanee River were upgraded with new generators, Inergen fire suppression systems and an anti-syphon double-wall fuel storage system. These protection systems reduce the risk of accidental releases to the environment.

Technology Improvement

Telecommunications technology has changed over the years. The primary result is service improvement to our customers. A secondary result is energy and cost savings.

• Consistent with the Service Improvement Program, radio sites in the North and remote areas were converted from analog radio to digital radio signal equipment. The equipment change reduces the total electricity consumption for the sites and reduces the required size of standby generators and fuel tank systems.

Teleconferencing and Video Conferencing

Teleconferencing and Video Conferencing are prime examples of how communication technology can be used to reduce the cost of travel, conserve resources and reduce emissions to the environment.

Report on Environmental Programs: Reduce (continued)

Technology use Quan/04 Conference calls

Teleconferencing 17,243 Videoconferencing 533

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Report on Environmental Programs: Reuse

New Life for Equipment

For many types of electronic equipment, repairs and upgrades are not feasible. However, for some equipment, the useful life can be extended. MTS repairs and retrofits telephone sets and TV equipment internally, and supports the Computers for Schools initiative through the Telephone Pioneers.

Material Quan/04

Telephone sets refurbished 34,650 MTS TV equipment refurbished 8085 Computers for School Program 219 Modems refurbished 26,068

Remanufactured Toner Cartridges

90% of a toner cartridge is recyclable or can be reused. Purchasing recycled toner cartridges is cost efficient with savings of 13% to 74% per unit. Using recycled cartridges saves resources, and energy, reduces landfill volumes and supports employment in Manitoba.

• In 2004, 631 printer cartridges were returned for recycling.

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The MTS Volunteers recycled 2,159 pounds of aluminum cans in 2004. The MTS Volunteers pick up cans from all MTS buildings within the City of Winnipeg.

MTS Volunteers once again donated time at the International Peace Gardens in June of 2004. The 60 volunteers spent some 1200 hours gardening, planting trees, painting, fixing picnic benches and undertaking general clean up. The MTS Volunteers have joined with their partners from Sasktel on this program for the past 5 years.

The Volunteers, along with Industry Canada, are the founding partners of the Computers For Schools program. To date, the program has seen the refurbishment of over 350,000 computers nationally. In Manitoba, we recycled or refurbished in excess of 1500 computers, 500 Laptops, and 300 printers in 2004.

The MTS Volunteers are the power behind the program, donating over 2000 hours per year to the program. MTS and the MTS Volunteers (Pioneers) have received local and national awards and recognition for their dedication to the program.

MTS Volunteers (Pioneers)

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Office Lighting UpgradesMTS will continue the ballast replacement program initiated in 2003.

• 191 Pioneer and 333 Main St. office towers will have conventional fluorescent lighting replaced with

high efficient light electronic fluorescent tubes.

Site UpgradesThe East Lake Winnipeg Radio route provides telephone service to the communities in the Island Lake area. With ad-vancements in telephone transmission efficiency and fibre-optic links, the route and building requirements will change in 2005.

• The site at Goose Lake will be upgraded with new efficient-operation generators, and the fuel storage tank will be replaced with an anti-syphon double-wall storage system. The Halon fire suppression system will be replaced with an ozone friendly fire suppression equipment. • The prime power diesel generating sites at McPhail River, Cobham Lake and Cantin River will no longer be required. Preliminary investigation into decommissioning these sites was started in 2004. The site studies will continue in 2005 and the site closure and decommissioning will continue into 2006. • Formal energy audits are planned for the major occupancies at MTS Place, Alpine exchange and Edison exchange.

Driving Efficiency InitiativeMTS will be participating in the Repair Our Air Fleet Challenge, a competition between public and private fleets to re-duce unnecessary vehicle idling. The program is funded and supported by Natural Resources Canada and participants are responsible for the installation and purchase/rental of measurement technology required for the challenge.

• Previous participants have succeeded in reducing idling from an average of 20% - 35% of operating time to as little as 3.5% within the three-month competition period.

Fleet Fuel Efficiency Improvement Program.Fleet services will be investigating stand-alone heaters for splicing trucks.

•The stand-alone heater will provide space heat to the splicing area of a service truck. The space heaters are more efficient than operating the vehicle for supplementary heat. This initiative will reduce vehicle idle time during winter operations.

Initiatives for 2005 Looking Forward

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Integration of Allstream Environment Practices.In 2005, MTS will establish one integrated Environmental Management System for the combined MTS Allstream organization, including the following:

• Allstream and MTS operations will work to integrate environment practices and programs under one environment policy.

• Compliance procedures for Allstream operations.

In conclusion, MTS has demonstrated its commitment to the environment throughformalized and measures programs / initiatives since 1995. This will continue in 2005 and beyond.

For more information on MTS Environment Programs please contact:

Fred Riddle, CCEPManager Environment Programs204 941-6521fred.riddle@mts.ca

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Initiatives for 2005 Looking Forward