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5th Annual Communications ConferenceSeptember 11, 2007

Safe harbor
Safe Harbor

The statements in this presentation are “forward looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such statements are based on current expectations, are not strictly historical statements, and may differ materially from actual results. Forward looking statements include without limitation, those regarding management's plans, goals, expectations, guidance, objectives, strategy, and timing for future operations and products such as product plans and performance, predictions or expectations of future growth, management's assessment of market factors, currency exchange rates, the availability of financing and future financial performance. Among factors that could cause actual results to differ materially are changes in business conditions, including changes in the telecommunications or Internet industry or the general economy or capital markets; DSL, Internet, Voice over Internet Protocol (“VoIP”) and fixed line and wireless telecom competition; changes in service offerings or business strategies; fluctuations in currency exchange rates; difficulty in provisioning VoIP, DSL and data services; changes in the regulatory schemes and regulatory enforcement in the markets in which we operate; restrictions on our ability to follow certain strategies or complete certain transactions as a result of our capital structure or debt covenants; the possible inability to raise capital when needed, or at all; the inability to reduce debt significantly; risks associated with PRIMUS's limited DSL, Internet, data and web-hosting experience and expertise, entry into developing markets, the possible inability to hire and/or retain qualified sales, technical and other personnel; and risks associated with international operations (including foreign currency translation risks); dependence on effective information systems; dependence on third parties to enable us to expand and manage our global network and operations; and dependence on the performance of PRIMUS's global communications network. These factors are discussed more fully in PRIMUS's public filings, including its most recent 10Q and 10K filings with the Securities and Exchange Commission. Readers are cautioned not to place undue reliance on these forward-looking statements which speak only as of the date these statements were made. PRIMUS disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


About primus

We are a global, facilities-based, integrated communications service provider of bundled voice, VoIP, Internet and data hosting services to retail customers in select major international markets


Where we do business





Global Wholesale

Where We Do Business

* All USD figures based on six months ended 6/30/07, annualized; customer numbers are as of July 31, 2007


The services we offer





The Services We Offer….









Enterprise IP












Our current position
Our Current Position

  • Strong cash position and an improved two-year liquidity outlook

    • No material debt maturities until 2nd half of 2009

  • Revenue and margin from new growth services are showing 8% and 7% CQGR (compounded quarterly growth rate)

    • Revenue run-rate in excess of $210 million annually

  • With enhanced liquidity we are investing more in sales and marketing, improving our sales productivity and tailoring our spend toward growth services

    • Our competitors continue to out-spend us in advertising and marketing

  • We are seeing more contribution from new growth services to combat decline in legacy, high-margin stand-alone services (e.g., LD and dial-up Internet)

    • Due to usage declines stemming from mobile, broadband and VoIP substitution

  • Low-margin services (e.g., wholesale voice and pre-paid) may either decline or remain stable

    • Within our control and depend on profitability


Accelerating growth expanding margins from growth services

* Includes VoIP, data/hosting, broadband IP, on-net local and wireless

Accelerating Growth/Expanding Margins from Growth Services*

(US$ millions)



$210 MM/Year Revenue Run Rate with Expanding Margins


Two year transformation plan
Two-Year Transformation Plan and wireless

  • Continue to strengthen the balance sheet and medium-term liquidity position

  • Invest in high-margin, high-growth initiatives to compensate for revenue decline in the legacy voice and dial-up ISP businesses

  • Expand margins by increasing the revenue mix in favor of higher- margin growth services and on-net services

  • Narrow geographic and product focus

  • Continue to improve the Company’s non-sales and non-marketing cost structure through increased outsourcing and/or off-shoring and aggressive cost management

  • Sell non-strategic businesses to generate $50 million - $100 million in cash by the year end 2008


Growth Initiatives/Opportunities and wireless

  • Additional and expanded hosting centers in Canada and Australia

    • High margin, high growth service

  • Expanding direct and indirect sales channels in Canada, Australia, the US and the UK to grow hosting and IP services

  • Additional DSLAMs in Australia

    • Increasing from 180 to 255 for expanded coverage and more on-net revenue

Goal: To generate quarter-over-quarter revenue and margin growth from these services that more than off-sets decline of legacy, high-margin, stand-alone services


Financial summary

Financial Summary and wireless

Annual financial summary

First Half and wireless






($ in millions)

Net Revenue






Gross Margin







Adjusted EBITDA






Interest Expense, net







Free Cash Flow






Capital Expenditures






Net Debt






Annual Financial Summary

(1) Adjusted EBITDA defined as Net Income plus Interest Expense, Income Tax Expense, Depreciation and Amortization, Non-cash compensation Expense,

Loss on Sale of Assets, Asset Impairment Write-down, and Equity investment Write-off and loss; minus (Gain) Loss on Early Extinguishment of Debt, Foreign

Currency Transaction, Extraordinary Items, and Interest Income and Other Income. 2006 EBITDA includes $4MM non-recurring, non-cash restructuring charge

related to PrePaid Services business (Q206) and $1.5MM non-cash compensation expense.

(2) Free cash flow defined as net cash provided by (used in) operating activities less Capital Expenditures.


Quarterly adjusted ebitda 1
Quarterly Adjusted EBITDA and wireless(1)


(1) Adjusted EBITDA defined as Net Income plus Interest Expense, Income Tax Expense, Depreciation and Amortization, Non-cash

compensation Expense, Loss on Sale of Assets, Asset Impairment Write-down, and Equity investment Write-off and loss; minus (Gain) Loss on

Early Extinguishment of Debt, Foreign Currency Transaction, Extraordinary Items, and Interest Income and Other Income.All EBITDA figures

exclude results of Primus India which was sold in Q206. Q206 EBITDA includes $4MM non-recurring, non-cash restructuring charge related to

Prepaid Services business and $1.5MM non-cash compensation expense.


Financial trends

Revenue from Legacy Products and wireless

Revenue from Growth Products(1)

Total Company Gross Margin %


(1)Includes VoIP, data/hosting, broadband IP, on-net local and wireless

Financial Trends

(US$ millions)

% of Net Revenue

% of Net Revenue


Capital investments

Capital Expenditures and wireless

($ in millions)

Capital Investments

  • 2007 Cap Ex is expected to be in the range of $40 million - $45 million to be followed by lower Cap Ex in 2008

  • 2007 Cap Ex includes investments for Australian DSLAM expansion, data center expansion in Canada and Australia, and soft switches in Europe and Canada

  • Significant investments in switching platforms and fiber capacity from 1998 to 2001

  • Utilized IRUs and leases rather than laying fiber

  • Minimal future fiber capacity purchases due to:

    • Adequate existing capacity

    • Increased routing of voice traffic over public Internet


Liquidity enhancing events
Liquidity Enhancing Events and wireless

  • Issued $108 million of Second Lien Notes in Q107

    • $75 million for cash

  • Exchanged $5 million of 7% Step-Up Debentures for equity in Q207

  • Sold 22.5 million shares of common equity for $19 million net proceeds in Q307

    • Extends the maturity of the 5% Exchangeable Notes to 2010

  • Refinanced $35 million credit facility in Canada in Q107, pushing maturity from 2008 to 2012

  • Refinanced Australian IRU maturity from Jan 2007 to Dec 2008 in Q107


Current debt structure and maturities

June 30, 2007 and wireless(1)

PTGI Debt:

12.75% Senior Notes due Oct 2009 (1)


3.75% Convertible Senior Notes due Sept 2010


Future Debt Maturities

7.00% Step-Up Debentures due Aug 2009 (2)


Total PTGI Debt


PTHI Debt:

8.00% Senior Notes due Jan 2014


Senior Secured Term Loan due Feb 2011


5.00% Exchangeable Notes due June 2010 (3)


Total PTHI Debt


($ in millions)


14.25% Second Lien Notes due May 2011


Total PTIHC Debt

$ 108.2

Operating Subsidiary Debt:

Canadian Credit Facility due March 2012


(As of June 30, 2007)

Vendor Financing and Other Debt


Total Subsidiary Debt




(1) Includes Q3 2007 repurchase of $3.2 Million

(2) Convertible into equity of $1.187/share if Primus stock trades above $1.78 for 20 days in any 30 consecutive day trading period

(3) Convertible into equity at $1.20/share if Primus stock trades above $1.80 for 20 days in any 30 consecutive day trading period

Current Debt Structure and Maturities

(US$ millions)


Credit ratios are improving

YTD and wireless




Net Coverage Ratio




Total Debt / EBITDA




Net Debt / EBITDA




Credit Ratios Are Improving


Investment merits
Investment Merits and wireless

  • Improved liquidity and debt maturity outlook

  • Investments to accelerate growth in select products

  • Increased revenue and expanding margin from growth products

  • Potential further deleveraging

  • Potential asset sales


5 and wirelessth Annual Communications ConferenceSeptember 11, 2007