Managing Growth

1
Managing Growth
Jerry Kent Chief Executive Officer

• SIM St. Louis Leadership Workshop
• August 21, 2007

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Topics

• History of Companies
• Dealing with Change
• Management Fundamentals

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History of Companies
4
Chapter 1 Cencom Cable

• Founded in 1982
• Grew to 550K subscribers
• Top-20 Cable Operator
• Jerry Kent, Howard Wood as executives
• First bond offering in 1987-88
• Merged into Hallmark in 1991
• Strategic partnership almost

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Chapter 2, Part 1 Charter

• Founded in 1993
• By top Cencom managers, including Kent and Wood
• Backed by Charterhouse, OPUBCO
• Timing was not ideal
• Cable harshly re-regulated
• Threats from RBOCs
• Satellite competition
• Broadband pipe
• PACTEL Experience
• Grew to 1.3 million customers
• Top-10 Cable Operator
• In 1994, acquired 100K customers
• In 1995, re-acquired bulk of properties sold to
  Hallmark
• All together, acquired and integrated 36
  acquisitions
• Sold to Paul Allen in 1998 (merged with other
  Allen holdings)

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Chapter 2, Part 2 Charter

• Paul Allens Goals
• 12 major acquisitions
• Became 4th largest cable operator
• 7 million customers
• 15,000 employees
• Funding milestones
• 6 billion from Paul Allen
• Successful integration of 15 billion worth of
  acquisitions
• At the time 3rd largest IPO high-yield bond
  offering in U.S. history

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Chapter 2, Part 3 Charter

• Superior operating results, outperforming peers
• Top performing public cable stock until Kent
  resignation in September 2001
• Wood resigned from Board in December 2001

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Chapter 3, Part 1 Cequel

• Founded January 2002
• Partners Jerry Kent, Howard Wood, Dan Bergstein
• Concept
• Aggregate top management talent
• Attract trusted equity partners
• Acquire multiple companies in troubled sectors
• Manage companies for turnaround/consolidation
• Build value for investors
• Name
• Our third major collaboration
• Our lucky charm C

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Chapter 3, Part 1 Cequel
2002-2006
2003-2004
2003-Present
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• Towers Rooftops Backbone of the Wireless
  Industry
• In 2002
• Sector was coming out of a major slump (2 major
  tower co. bankruptcies)
• AATs growth prospects were limited primarily a
  managed site business
• Long-time equity partner (Charterhouse) asked us
  to take a look
• The Challenge
• Transform AAT into a major owned tower player
• Capitalize on improving wireless trends grow
  revenues cash flow
• Actions
• Built a customer-service culture and capabilities
• Integrated several significant, attractively
  priced acquisitions
• Added over 200 build-to-suit (BTS) towers
• Focused on fundamentals management team, back
  office, leverage
• Results
• Became largest privately owned tower operator in
  U.S.
• Consistent growth in FCF, TCF, EBITDA
• 100 million dividend to investors
• Sold in 2006, to SBA, for more than 1.1B

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• Nationwide fiber optic network voice, video,
  data transport
• In 2003
• Owned by Cincinnati Bell
• Debt-laden and going nowhere
• We purchased (with Corvis) for pennies on the
  dollar, no debt
• The Challenge
• Improve efficiencies
• Build value through consolidation
• Exited management in 2004 to focus on other
  businesses
• Today, maintain extensive relationship with new
  owner, Level 3
• Provides a number of competitive advantages to
  our cable operations

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• Cebridge (now Suddenlink) is our new
  Cencom/Charter
• Digital Cable
• High-Speed Internet
• Telephony and other advanced services
• In 2003
• Company known as Classic Cable
• Emerging from bankruptcy
• Served primarily rural markets
• Few upgraded systems or advanced services
• The Purpose Use Classic as a platform company
  to build a top-10 cable operator.
• Assemble management team
• Achieve efficiencies of scale
• Upgrade, launch advanced services, create new
  revenue streams
• Focus on customer service
• Identify and pursue transforming acquisitions

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Chapter 3, Part 2
All numbers in this chart are rounded/approximate.
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Chapter 3, Part 2
All numbers in this chart are rounded/approximate.
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Today

• 8th Largest Multiple-System Operator (MSO)
• More than 1 billion in annual revenues
• Major provider in second-tier markets
• Our properties are generally not in the first
  stage of RBOC video competition
• Our primary challenges and opportunities
• Integrating 3 businesses, thousands of new
  employees, diverse technologies
• Creating one focused company, with a shared
  vision and common culture
• Thriving in an increasingly competitive
  environment
• Mining cables competitive advantage
• Triple play of voice-video-data
• Bundled services (savings, convenience)
• Video-on-Demand offering
• B2B capability

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Today

• Coast-to-Coast Footprint
• Diverse properties
• Geographically clustered areas

Largest systems include ... - Charleston/Beckley/
Parkersburg, W. Va. - Rocky Mount/Greenville,
N.C. - Amarillo, Texas - Lubbock, Texas - Lake
Charles, La. - Midland, Texas
- Bryan/College Station, Texas - Alexandria,
La. - Tyler, Texas - Eureka, Calif.
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In summary

• More than 30 major acquisitions
• More than 25 billion in financing
• Commitment to superior customer service
• Track record of superior returns for investors
• Cencom Cable Associates 1983-1991 52.0 IRR
• CableMaxx 1993-1996 33.2 IRR
• Charter Communications 1993-1998 49.1 IRR
• Charter Communications 1995-1998 87.1 IRR
• AAT Communications Corp. 2002-2006 30.7 IRR
• AAT Communications Corp. 2003-2006 38.9 IRR

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Dealing with Change
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A Year of Tremendous Change

• Sold AAT Communications
• Completed two major acquisitions
• 3.0B debt 0.75B equity
• Transferred management talent
• Migrated billing, e-mail, and customer-support
  systems
• 3,500 new employees
• 1.1M new cable customers
• 400K new Internet customers
• 30K new phone customers
• Integrated four new call centers with multiple
  technologies
• Centralized reporting, workforce management,
  commercial- and residential-customer support
• Launched new knowledge management programs

• Introduced new IT platforms
• Customer Web site
• Customer portal
• Employee/enterprise portal
• Companywide online training program
• Created new organization focused exclusively on
  business customers
• Selected, implemented new name
• Rolled out new branding to all new properties,
  across all marketing media
• Expanded phone service
• Available to 80 of homes, end of 07
• Up from 15 of homes, end of 06

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Keys to Successful Execution

• Communication
• Up, down, across
• Open up about bad news
• Decentralization
• Empower employees
• Incent them with equity
• Overlay with strict financial controls
• Three most-important words in business
• Manage things, lead people
• Measure and react
• Customer satisfaction
• Employee satisfaction
• Cash flow

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Keys to Successful Execution

• Core Leadership Committee
• Cross-functional make up
• Limited to top decision makers
• Regular communication (weekly calls throughout
  the process)
• Promptly addressed and removed obstacles
• Dedicated Sub-Teams
• Backbone Construction
• Core Platform Standup
• Systems Integration
• Advanced Services Deployment
• Expert Partners
• Backbone Cisco CRS Platform
• Softswitch Nortel CS2k
• Provisioning Big Band Fast Flow
• E-mail Openwave
• E-mail Migration True Switch
• Mediation Sigma Systems
• Voice Mail Platform IP Unity

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Management Fundamentals
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Management Fundamentals

• Be opportunistic timing is (almost) everything.
• Choose the right partners.
• Equity and entrepreneurial environment attract
  talent.
• Youre only as good as the people around you.
• No egos or bureaucracy allowed.
• Guard your customers as jealously as you guard
  your children.
• Think out of the box dont play follow the
  leader.
• The culture defines the company.

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Building Blocks of Our Culture
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Managing Growth
Jerry Kent Chief Executive Officer

• SIM St. Louis Leadership Workshop
• August 21, 2007